Home Loan Modification: Tips to Succeed – Guest Post
It’s impossible to ignore the fact that the times have been tough over the past few years. We all believed—or at least hoped—this crisis, recession, slump, or whatever the current term is, would be over by nor. The reality is that it is still a long road to recover, and while this might not have been a problem a few years back, the build-up of hardship is finally becoming overwhelming. You aren’t making as much household income as you once were, the cost of living has increased, and you are upside-down in your home—at the very least, you hope you can at least come out of this experience with a sound mind.
You have heard of the possibilities of home loan modification, but you have also heard how difficult it can be to get approved for the program, and you wonder if it is worth the hassle. You are not alone; thousands of families have been where you are, and while the success stories might not be as high as some would like, they do exist. The common thread linking the ones who have been successful in their endeavors shows that their success has more to do with following a process than having good luck. Here are some tips to help you make it.
Stay thorough. There are several documents that will be required of you in this process, such as pay stubs, hardship letters, household budget, and any other documents your loan servicer might want. Make sure you get everything together and prepared for this submission, and a single missing document will likely result in your entire file dropping to the bottom of the stack.
Stay connected. You should be calling—and speaking with!—your servicer at least once a week to look into the progress of your request. Things to look into include: making sure the file is complete, looking over the documents, expressing any changes in circumstances, etc. Your servicer will help, but in all honesty, lenders wish to hear from the homeowners themselves on a fairly regular basis.
Stay informed. This is best accomplished by asking questions. Be sure you know exactly what is required of you by your servicer. Each individual applicant is different, and his servicer will need different things from him than form another applicant. Typically, applications require proof of monthly income. For you, this might mean one pay stub, two stubs, or possibly four depending on how you receive your income. Make sure you are completely clear about what is expected of you.
Stay persistent. This is bound to be a very challenging—and often frustrating—process, especially when you are asked to resubmit documents. Hang in there. If you go into the process knowing you will have to jump through a wide range of hoops, your patience and compliance may be rewarded. Just remember to be flexible and calm.
Stay Organized. Label your documents. This is a huge step to remember, as lenders receive thousands upon thousands of documents each week. Cut your losses and avoid an even bigger hassle by covering yourself now. You would hate to restart or backtrack because something went missing. You will be stressed enough by this point, and you will want to avoid any further issues if you can. Also work to organize your tax documents. Keep in mind that you will not only have to surrender your income documents, but you will have to sign an IRS Form 4506-T, which authorizes your servicer to access your federal tax return. The number one reason people fail in this process is because they are unable to provide substantive proof of income.
Stay Cool. This will be an emotional process, and you will understandable become aggravated or frustrated with your lender. Remain calm in these situations, as poor behavior can bring unwanted consequences that will only complicate the situation. This is, in the end, a business deal; and you are working with people who have been through the process many more times that you have. If you treat the loan providers poorly, then they will have much less flexibility with you than if you remained cordial. You really are a face in the crowd in this situation, don’t make yourself stand out for the wrong reasons.
As part of the process you will need to prepare a hardship letter for your servicer and loan provider. The purpose of a hardship letter is to explain the circumstances that got you into this mess to begin with. The importance of this letter cannot be overstated, and it is imperative that you write it well. In the letter, you want to be specific and waste little time getting to the point. If the loan provider cannot understand from your letter exactly what caused you to fall behind, they will assume there is something you are not telling them. You need to be honest and open as well. If you try to use an excuse such as illness to explain away your hardship and it turns out your problems began before you became sick, your credibility will be blown and you will have a very hard time getting back on track. The letter should give a clear timeline of events leading up to the crisis, and be as concise as possible. Two or three paragraphs is much easier to read over a five page letter.
This is not an easy process. If it were, you would not need to research the subject. Keep this in mind, and prepare yourself for the road ahead. You will get discouraged, tired, and want to just give up—but you won’t; and this is why you will succeed where others have not. Work to be as prepared as possible. Continue reading on the subject, and if possible, talk to others who have already gone through the process—you can learn from their failures, or reap the benefits from their successes. In the end, a good deal of the process relies on your involvement. Stay open and available, and stick with it.
Alan Brady is a passionate blogger who spends his time researching and writing about the economy, recent job market trends and business. He is an online producer for the mortgage attorney locator, attorneys.com.