When you apply for a loan modification, your mortgage servicer is going to review your entire hardship and financial situation to determine your eligibility for a modified payment. With that said, you will need to gather all the required paperwork and financial information required to begin the process.
Here’s a quick and simple list of items you will need to apply for a loan modification. Keep all these documentations in a folder that is easily accessable, and please keep in mind that you may have to send this paperwork many times to your mortgage servicer because they will claim they never got it, or you need to update it, etc.
1. Financial statement
This worksheet can be defined as a document that contains a borrower’s monthly income and expenses that they wrote down. Accuracy of the information on this worksheet is a major factor in eligibility. Absence of debts may disqualify you due to the fact that your servicer is going to uncover them eventually, whether they are on the document or not.
2. Hardship letter
As mentioned above, hardship letters help to outline the events that have led to your mortgage becoming unaffordable. Although crucial information needs to be addressed in this letter, it also needs to be straight and to the point. Using over 2 pages to describe your situation is actually overdoing it.
3. Proof of income
Usually income must be verified for each borrower who lives in the primary residence. Evidence of income classifies as:
* For salary or hourly wages: two most recent months pay-stubs
* Self employed borrowers: most recent quarterly profit and loss statement
* Unemployment, social security, or disability benefits: Copy of statement or letter from the provider that states the amount paid and how long you will be receiving the benefits, or two most recent bank statements to prove the income being received.
* Alimony or child support: Copy of divorce decree, separation agreement, or other agreement in writing filed with the court explaining how much you will be paid and the amount of time in which it will be received. You can also provide two most recent months of bank statements to show receipt of such payment.
4. Tax Authorization (IRS 4506T-EZ Form)
Your lender needs this form for the permission to request a copy of your most recent tax return from the IRS. Borrowers should make copies of this form for their own records.
5. Bank statements
At least two most recent monthly bank statements are required when applying for a loan modification. Bank statements enable a lender to see your total income and expenses and how they are being distributed each month. This transparency will help them make their decision.
Once you have gathered everything you need to submit your application, you are now ready to pick up the phone and call your servicer. Find out which department will be handling your file and get the fax number and mailing address. You may want to fax it in a couple of times and send it certified mail as well so you can confirm when they have received everything.