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In many instances a homeowner is set up on a repayment plan (forbearance) plan prior to completing a loan modification which allows a servicer (mortgage company) to monitor the financial condition of a homeowner during the special forbearance period to be sure the homeowner will be able to make the payments to the lender. There are vital documents required that are reviewed by a mortgage company
Hardship Letter:
To meet the requirements for a loan modification homeowners must have a compelling hardship. The hardship must be documented and given as many facts as possible to support your case. A is very subjective and pretty much a requirement in the course of getting a loan modification. There are a few adversities that are considered charitable and do not meet the criteria quitting a job or reducing the amount of hours worked are typically unacceptable. The adversities are documented and if there is an additional non-payment the homeowners can not use the same reason for non-payment otherwise their previous adversities was really not over and in many instances the homeowners are not allowed a loan modification.
Financial Statement:
This is used to verify the homeowners ability to pay. This is usually the first form reviewed by the lenders mediator. This form must clearly indicate monthly wages and expenses as well as current assets and liabilities. This is what makes and breaks the entire loan modification review. This form also shows whether or not the homeowner will be able to make payments if the loan is modified. There must be a surplus wages at the end of the loan modification or else the plan will be denied. The plan must be affordable. If a homeowner is severely over-leveraged with debt there is little chance that a loan modification will cure the delinquency. Monthly expenses are reviewed to determine what bills are necessary and what are unnecessary. Necessary expenses are food, utilities and gas and an example of unnecessary are entertainment expenses, expensive phone plans and unsecured debt. Household expenses loan payments, utilities, and taxes take up most of the monthly budget. Do not make operating costs look unreasonable will be a red flag to get further detail. The negotiators will always look for assets that can be liquidated.
Proof of Salary:
The proof of wages is usually a paycheck stub, a P&L Profit and Loss Statement if self employed, or checking account report showing paycheck deposits. The proof of wages is required to prove the homeowner has steady wages. The homeowner must also give frequency of wages. The proof of wages must correspond with the wages shown on the financial report. Resolve any discrepancies


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Each bank/lender has specific requirments that qualify borrowers for loan modifications. The most important aspect is income. If a homeowner can prove that they can pay their mortgage at reasonable modified numbers along wtih all necessary monthly expenses, then the bank will most likely grant the loan modification.

Thomas Powell
Author
Loan Modification Made Simple eBook