What To Expect When You Need A Mortgage Loan Modification
If you are like most people, when you buy a home, you have a mortgage loan. A mortgage is a long-term loan; generally, the loan is for 20 to 30 years. A lot can happen during the term of a mortgage, including a change in your income for the worse. You could have lost a job or gotten a divorce, or perhaps you became ill or disabled. Whatever the reason, you may not be able to keep paying the same amount monthly for your mortgage. This is where loan modification comes into play. In order to have the lender approve a change in your payments, you must meet certain criteria. While each lending institution will have its own requirements, here are the basics
Inability to Pay Current Mortgage
You cannot just decide you want to buy a new car or vacation home and ask for your mortgage to be modified. You must not be able to pay the current mortgage payment through no fault of your own. The lender is going to want to see proof that your income has decreased. You will need to provide pay stubs, bank statements, tax returns, and divorce papers if relevant. You may also be required to provide a statement that explains your hardship situation. It is a good idea to have a lawyer help you with this statement.
Ability to Pay New Mortgage
The lender is also going to want assurance that you will be able to pay the new mortgage rate if modification is granted. In addition to the above documents, you may need to bring proof of disability or SSI payments.
Trial Period
Many lenders will also want a trial period for the new payments. You will be expected to pay the new amount on time every month for the duration of the trial period. If you can do this, they will grant the modification. However, if you cannot meet the new payment schedule, you will need to talk with them about some other arrangement to avoid losing the property.
When you went to closing and signed all the documentation for the mortgage and transfer of the property, you probably had a lawyer go over everything first. When you need a loan modification, you should use a lawyer, too. They will make sure you have all the required documentation to be qualified, they can appeal a denial for you, and they will make sure that the new mortgage is what you agreed to and that there are no hidden fees or requirements.
For more information, contact an attorney like Ellen K Lawson Attorney at Law PLC.