Do It Yourself Home Loan Modification Tips

July 23-25 Asian Journal Weekend Edition

I get inquiries from homeowners who are thinking of doing home loan modifications themselves; some of them have already contacted their lenders, some are still thinking about it but are scared, while some are so dismayed with the long process and just abandoned the application altogether. For those homeowners who have braved it and took the chance, am sure it took a lot of sweat and second thoughts before you sat down and said, “ I will call my lender today.” If you did and you are currently waiting for a representative to return your call, great job! Whatever the outcome is, you would not know if you did not persist.

By now, you must have read up on Making Home Affordable Program, the government’s initiative to help challenged homeowners modify their existing loans. Your decision to undertake your own loan modification or seek the services of a qualified professional, will depend on your personal circumstance and beliefs. If you choose to do it yourself, there are general approaches to the loan modification process that you ought to be familiar with, even before you make that first contact. Here are some tips:

Tip # 1: Treat the phone call to your lender as if you are doing business and you are poised to be awarded a contract. Do not call while you are on errands! Find a quiet time to call. The phone number on your mortgage statement is a good place to start. However, when you call for the first time, you do not need to tell the first person you talk to, your life’s story. Ask to be connected directly to ‘ loss mitigation’, or, ‘ pre-foreclosure’, or whatever department is handling requests for loan modification for that lender. Tell the Level 1 customer service rep that you are looking to modify your loan. Be sure to ask for the direct number to that department, and yes, WRITE IT DOWN! Have a pencil and paper ready, because you will need to make note of the contact information of the person you will talk to in that particular department (loan modification). While you are at it and you are now talking to the correct person, ask for his/her supervisor’s name and contact information. This will come in handy in case the representative who is assisting you has fallen deaf to your calls and emails. You may not be lucky to obtain this, but, try.

Tip # 2: Document preparation is key. Before you make that call, collect all pertinent documentation and be ready to answer questions on the following:

1. Mortgage loan statement- including mortgage balance, monthly payment, current interest rate, second lienholders, any delinquent payments, & amount of delinquency; know the terms of your loan- is it fixed or adjusting, is there a balloon payment & a pre-payment penalty, are you paying interest only, etc etc.
2. Income & Asset information - paystubs, W2s, 1099s, tax returns, pension & benefits statement, retirement statements, benefit & award letters
3. Information on Subject Property – primary vs investment property, current value, purchase price, equity amount if any, sold comparables, listing history ( if currently listed in the market)
4. Financial Profile- recurring expenses, any hardship ( unemployment, pay cut, furlough), available assets

If your mortgage payment is more than 31% of your current income, the counselor will ask you the following: a) is the property ‘ owner occupied’ 1 to 4 units? b) is the loan amount less than $ 729,750? c) is there a change in income and expense that has made the mortgage payment unaffordable?

If the above questions are all positive, then the loan counselor may qualify you for a trial modification and send you paperwork to fill up.

Tip # 3: Be persistent but patient! You may be placed on long periods on hold, remember that these loan counselors deal with hundreds of challenged homeowners like you everyday. They could get grumpy and tired and could be rude at times. Do not lose your cool, but be diplomatic.

Any homeowner facing difficulty with mortgage payment is encouraged to apply for a loan modification. Though there are standard guidelines outlined thru Making Home Affordable, practices and implementation will differ from lender to lender. Not all lenders are participating in this streamlined effort, so, be ready if help is not extended. There are foreclosure alternatives available if home retention through loan modification cannot be realized.

If you need worksheets to help you simplify the documentation, contact me via email so I could send you copies of a Financial Information Worksheet. It is wise to have all these worksheets in front of you while speaking to a loan counselor.