If you have a mortgage with any bank, and are finding the payments to be a hardship but your mortgage is upside down, you can request help through your bank’s loan modifications programs. These programs are similar to refinancing a home mortgage except that you have to work with your current lender.
Although legitimate home modification services are available and can be helpful – these cost money, sometimes thousands, to do much of the work that you can do yourself. But you should know that working through the loan modifications programs will be much more complicated than when you applied for your original home loan to purchase your house. For a do-it-yourself home loan modification, here is some information that will help keep your request moving through the system and organized.
Buy a Notebook
You will want to document every communication you have with your bank about the process. There are a lot of details to remember. Always have this notebook out when you are speaking with a bank representative. With each communication record the date, time, name of the person you are talking to, the call center you are connected to and the details of the conversation. Also, record when you mail or fax information to the bank.
Starting the Process
Go to your bank’s website and look for a link to its loan modification information. This will give you more information about the process with your bank.
Get a case file opened by calling the bank’s loan modification center. Likely, this will be a quick call where the operator will tell you to fill out paperwork you can find online or that may be mailed to you. Starting now, and with all your communications with your bank, whether by letter or phone, be kind and friendly. You want the person who is helping you to be your new best friend! The process will take time (months) and may get confusing and cause frustration – still be friendly and calm, even if you have to take an assertive approach.
Buy Binders and Folders
Get a binder or folder to put the paperwork into. You will be collecting a lot of financial documents and statements – probably much more than was necessary to take out the home loan in the first place. Keep it well organized!
Use a checklist to compile your paperwork. Most banks will provide you with a checklist. Do not skip anything – if you turn in your packet with missing paperwork it will not go through.
Turn in a Completed Packet
One missing page of information will derail your request through the bank’s loan modifications programs. And the bank may not notify you that paperwork is missing, it will just stop working on your request.
Some tips to get your packet accepted the first time: Turn in ALL pages. Even if a page is blank on a bank statement for example – turn it in. Yes, a missing blank page will stop the process. Know where 2 years worth of tax returns are, despite the checklist only asking for one – you may be required later to turn in the last two years of tax returns. Call your bank with any questions on the paperwork needed.
Type a request for modification statement. In this statement give details of your circumstances, but do not ramble. Include as much information as possible about why you are facing a hardship. This includes the birth or adoption of children, job loss, pay cuts, a mortgage payment that is about to reset, decline in home value, high medical bills etc. Give facts and figures and attach supporting documents. For example, state how much has your home value declined and attach a Zillow page to support your statement.
Copy the entire packet. Put the copy into your folder.
Send in the Packet
Mail the packet to the address given on the forms. You can fax it, however if you have to pay to have it faxed it will be very expensive as it is a lot of paperwork.
Call your bank two weeks after mailing the packet if you have not heard from them. This call is to confirm that the packet was received and found to be complete. Do not be surprise if you now get a “don’t call us, we’ll call you” statement.
Continue to Follow Up
Ignore the “don’t call us, we’ll call you” instructions. Now is the time to be persistent and assertive – but be nice, remember – new best friend. Call your bank at least once a week to find out the status of your request. Ask if you can be assigned to one person whom you can contact in the future. Ask how you can help to speed up the process. If your financial situation is going downhill fast – explain the circumstances. Ask these same questions with every weekly, or daily call. You bank may not take the initiative to inform you that more paperwork is needed. So ask if there is anything else the bank needs from you with each phone call.