What Are The Requirements For a Home Loan Modification?
A loan modification is an option for those faced with a possible foreclosure. Rather than have you continue to fall behind on payments and ultimately end up in foreclosure, lenders allow the option for a loan modification to those truly in need. Once approved for a loan modification, your monthly payments may be reduced to a more affordable amount.
While a loan modification is a convenient alternative to foreclosure, it’s not always available to all homeowners. A review must take place after which you will either be approved or denied your request for a loan modification.
When submitting an application for a loan modification, you will need to provide personal testimony and other documentation for the lender to review when making a decision.
- Hardship Letter
Most applications required an attached hardship letter. This letter needs to be an honest explanation of why you need the loan modification. It should describe your personal situation and all circumstances that contribute to your inability to pay your full monthly payments. All details described in (or left out of) your hardship letter will be later fact-checked against your credit record, so honesty is of the utmost importance.
- Financial Need
After detailing the reasons for your request in your hardship letter, it is helpful to back up your statements with documentation of unavoidable circumstances that led to your financial need. For example, documentation of loss of job, medical illness or disability, or death of a spouse are all acceptable life changes.
- Ability to Pay
To be approved for a loan modification, you’ll also need to demonstrate your ability to pay the new lowered monthly payment, despite the circumstances that led to your financial struggle. Depending on your scenario, your ability to pay may lead to a temporary modification where your monthly payments may be reduced for only a few months until you find a new job. Or it could show that your loan modification need is more permanent due to disability, etc.
- Proof of Financials
Many lenders may have different requirements, but generally speaking, all lenders will want to see a variety of financial statements to corroborate the financial struggle outlined in your hardship letter. These may include, recent pay stubs, bank statements, tax return information, and even retirement or investment accounts.
If you are facing financial hardship and are thinking about requesting a loan modification, contact our office to speak to an experienced Loan Modification attorney. Set up a consultation by contacting our office at (702) 998-1188, firstname.lastname@example.org, or via our online appointment scheduler.