What is a Loan Modification?

Loan Modifications are for eligible borrowers who can no longer afford to meet their monthly mortgage obligations. Whether homeowners are current, but having trouble making their payments; or whether they have missed payments, the program is designed to make the monthly mortgage payment more affordable, hence the name of the official site: www.makinghomeaffordable.gov

The basic concept is to bring your total home-related payment down to 31% of your gross income.

Borrowers must qualify by answering yes to the following questions:

• Is your home your primary residence?
• Is the amount owed on your first mortgage equal to or less than $729,750?
• Are you having trouble paying your mortgage?
• Did you get your current mortgage before Jan 1, 2009?
• Is your PITIA payment more than 31% of your gross income?

(PITIA being Principal, Interest, property Taxes, Insurance and homeowner’s Association dues.)

www.makinghomeaffordable.gov has a list of HUD counselors who will advise you FOR FREE.

While your application is being considered, FORECLOSURE PROCEDURES ARE STOPPED!

Once you file your application, it will be evaluated by an Underwriter.
My lender asked for the following documents:

• A Hardship Letter
• Personal Income Tax returns for the past 2 years (all schedules)
• Business Tax returns, if applicable
• Bank statement showing income for the past 30 days
• Copy of your homeowner’s insurance declaration page
• IRS Form 4506-T (authorization to request a transcript of your income tax return)

The documents were faxed in so that they are automatically entered into their database. So no need to spend time copying your tax returns.

Try some on-line research before deciding whether you need someone to help with the process. That should only be necessary if you are in an ambiguous situation with a dubious lender, or if the idea of writing a Hardship Letter makes you sweat blood.

With thousands upon thousands of homeowners competing for a loan modification, you should submit your application as soon as you can pull together all of your documentation. Currently, the program is scheduled to end in 2012. (you know, the year the Mayan calendar has predicted doom for us all.)