Introduction to the Mortgage Loan Modification Process
When you experience problems meeting your real estate payment obligations, you might qualify for a mortgage loan modification whereby the mortgage notes are modified by your lender such that the interest rate, loan term, and principal balance are adjusted to suit your needs. A typical mortgage loan modification process will take 3 months to come into full completion. Thus, if you get the first signs of financial constraints, you should take immediate action and contact your lender so that you can avoid tarnishing your credit score.
All lending institutions today have a loss mitigation department in charge of delinquent accounts. Those who work in these departments would normally have heavy workloads as they handle all aspects of loan default remedies. These can include real estate short sales, loan modifications, deed in lieu of foreclosure, mortgage forbearance, mortgage refinancing and all others involved in the process. Considering the volume of work involved, it can be very hard to reach a loss mitigator via phone, but you should be very persistent in your efforts.
If you cannot get through to a loss mitigator, you might request to meet a senior loan officer in the financial institution you are dealing with. You can also try sending modification requests in writing through certified mails. Keeping records of any written communication between you and the mitigator, and logs of conversations conducted via the phone is very important. You will be expected to provide a ‘request for modification affidavit (RMA) together with a hardship loan modification letter. Such a letter gives you an opportunity to express yourself and your financial situation in detail and explain the constraints that led to your current predicament. In the letter, you are also expected to explain the actions and measures you have taken to reduce the financial burden such as taking a second job, selling an extra car etc.
You should organize your financial records so the bank could review your financial situation and make an informed decision. Common records requested by the banks include bank statements, at least two years of your tax returns, your mortgage and personal insurance policies and a list of fix expenses that you service. Basically, the bank will review these documents to determine whether you qualify for a mortgage loan modification or not. If you do qualify, you will be assigned a loss mitigator who will work with you through the whole process to ensure you end up with a mortgage that you handle.
In conclusion, if you get approval, you will be put in a trial period whereby if you default during this trial period it may lead to foreclosure proceedings. Thus, you ought to commit to sticking to your end of contract, failure to which all your efforts will be futile.