Top 5 Tips for Securing a Loan Modification
Like many Americans, you or someone you know may be behind on your mortgage payments due to a number of possible financial troubles. Youâ€™re not alone.
As a member of the Top 5 in Real Estate Network, I am often asked if lenders will work with homeowners to modify their mortgage loans. The answer is often yes, but it will take some effort. Here are five tips for working with your lender to expedite a loan modification from top producing broker and real estate consumer advocate Ralph Roberts of Ralph Roberts Realty in Michigan.
1. Come Clean
It can be tempting to bend the truth when you are trying to convince a lender to approve a loan modification. Some homeowners are embarrassed; others try to fudge the numbers. However, only by laying all your cards on the table and disclosing the truth can you begin to attend to the root cause of your financial hardship and then develop and implement solutions that put you back on the path to long-term financial health.
2. Understand Your Lenderâ€™s Point of View
Regardless of how you ended up in the situation youâ€™re in, blaming the lender or the mortgage broker or loan officer who placed you in your current mortgage does little good, unless you can prove your point in court. Usually, you have a better chance of resolving the problem by understanding your lenderâ€™s point of view, even if you donâ€™t agree with it.
Know that for lenders, it all boils down to money. If you can show them that modifying your loan cost them less than a foreclosure would, and they believe you will honor the terms of the loan modification, they are likely to approve it. If not, then they are likely to reject it. Lenders need to protect their own interests and carefully screen out ineligible applicants, which can often make the process much more difficult and frustrating for homeowners who genuinely suffer financial hardship and need a loan modification.
3. Keep a Cool Head
Understandably, homeowners often become frustrated and angry when seeking assistance from their lender. Unfortunately, anger can result in the following:
- â€œAccidentalâ€ disconnects: The customer service rep youâ€™re speaking with may put you on hold permanently or hang up â€œaccidentally.â€
- Lost files: Your file may get â€œlostâ€ or â€œmisplaced.â€
- Rejection: Your lender may decide that you are unreasonable and that foreclosing would be less costly overall.
- A bad offer: Your lender may offer a workout solution that is worse than what you would get had you been nice about it.
If you doubt your own ability to remain calm, cool, and collected during the entire process, consider hiring a professional to represent you.
4. Give Them What They Need
Prior to applying for a loan modification, call your lender or visit its website to obtain an application packet or a list of items you need to submit with your application. Find out exactly which forms you need to fill out and which documents your lender needs to process your application. Label everything clearly and legibly with your name and loan number and provide a checklist of all items youâ€™re submitting in your application packet. Arrange the items in the order listed by your lender, so whoever is processing your application does not have to search for items. Include a cover page that lists your name and loan number in large print as well as an items-included list.
5. Ask For What You Want
Before discussing the terms of the loan modification with your lender, you should have a fairly clear idea of what you want and need. Answer the following questions for yourself. This will help you field questions from your lender:
- How much do you owe in late or missed payments?
- Can you catch up on the missed payments?
- Do you need additional time to catch up on missed payments?
- How much can you realistically afford to pay each month?
- Do you really want to keep your home or would you prefer to sell if you could walk away not owing anything?
Remember, an affordable loan modification can enable you to catch up on any missed payments, lower your monthly mortgage payment, and keep your house. To find out if you might be eligible for a loan modification, please e-mail me. Please also forward this important information on to any family members and friends who may find it useful.