Mortgage Modifications

In recent months, in response to the upswing in mortgage defaults and the difficulty they are facing in foreclosing on delinquent mortgages, lenders have increased their efforts at assisting borrowers in modifying their mortgage loans.

The process of applying for a mortgage loan modification is not for the weak at heart. It requires organization, perserverance and lots of patience.

Whether applying to the goverment's Making Home Affordable Program (HAMP) or directly modifying a loan through your lender, be prepared to spend a significant amount of time faxing papers and following up with the lender. Loan modifications are based on a ratio of income to expenses. As a result, banks require that all financial information is current; including bank statements, pay stubs and financial worksheets. Typically, these documents need to be updated every 60 days. In addition, the 4506-T, Hardship Letter and Request for Modification (RMA) package have an expiration date of approximately 90 days.

When submitting a loan modification package on your own, it is prudent to speak with the lender on a weekly basis to ensure that the documents required by the bank are in your file and current. Lenders often send letters to the customer requesting documents and supplying specific time frames for receipt. If not received by the deadline, files will be closed and the customer will need to begin the entire process again. A useful tool to keeping current is to submit pay stubs and bank statements (all pages, even if blank) as they become available instead of waiting for the ender to request the documents. The loan modification process can take anywhere from a few months to over a year. Bottom line - be patient and proactive.

The Law Office of R. Spencer Lauterbach assists its clients with the modification process. Acting as the liaison between the lender and the borrower, we help to organize the modification application package and review it so it can be seen in the best light by the lender. After submission, we follow up with the lender to make sure that all necessary documents have been received. The we stay with the process until a determination has been made. Throughout the process, the client is counseled and advised.

A word of caution: There are many individuals and firms, including lawyers, offering their services in connection with mortgage modification. Please be cautious. We advise that borrowers only utilize the services of local firms who they deal with on a face-to-face basis. Posted/Last Updated 2.15.2012