Mortgage modification changes the terms of a loan to make the monthly payment more affordable. Changes may be made to the interest rate or to the number of years the borrower has to repay the loan. A mortgage modification may also be called a loan modification, loan restructuring, or workout plan.
Most mortgage lenders are only set up to take your payments, or service the loan. They then forward the payments to the investor that actually owns your loan or note. Ask if your mortgage lender is only a servicer, and if so, ask them for the phone number to the investor that actually owns your home. Generally, the note owner must approve the loan modification.
What steps are involved?
- Review and document your finances and prepare a summary to show the lender.
- Gather all the documents necessary.
- Determine the current value of your home by researching online or contacting a real estate broker.
- Call your lender’s customer service phone number listed on your mortgage statement and ask to speak with the Loss Mitigation Department.
- Be sure to write down who you talked to and exactly what was said.
Important things to remember:
- Be sure to send copies and not original documents when paper work is requested.
- Attach a hardship statement that chronicles personal events such as, serious illness, job loss, etc.
- Typical documentation needed: bank statements, paystubs, tax returns, proof of disability, divorce or separation decrees, medical bills, and all household expenses.
Remember, it costs the lender to foreclose on your home, so mortgage modification is good for all parties. Your lender may have several program options to choose from, with different qualifications for each one.