The Real Deal About Modifying Your Mortgage
“The meek will inherit the land and enjoy great peace.” Proverbs 37:11
Even in the midst of the current foreclosure crisis, with faith, knowledge and persistence, you may be able to save your home and enjoy great peace. If you are upside down on your mortgage, facing the inability to pay your mortgage, expecting an interest rate increase, or already in foreclosure, there may be help for you. No matter how hard it seems and no matter how many times you may have received inconsistent information, continue to communicate with your lender, as there are instances where new programs are have been made available after the borrower’s initial communication.
Here are a few things that EVERY HOMEOWNER should know about the mortgage modification / lender communication process:
PART ONE: GET YOUR PAPERWORK TOGETHER
1. Write your hardship letter. It should be clear and honest with details about your past financial situation, what lead to the current situation, and how you may be able to pay a reduced/modified payment in the future if you are given a fresh start.
2. List all of your monthly expenses and be prepared to provide copies if necessary (your lender may provide a form, but click here to practice on this Income & Expense Worksheet because you may have to provide this information to several different parties at different times) Example: phone, internet, cable, electricity, gas, water/garbage, security system, carnote, credit card bills, loan payments, childcare, tuition, lunch money for school, books and fees for school, clothing, gas, life insurance, car insurance, spending money, tithes, groceries, public transportation / parking, etc - you want to keep this list handy so you can refer back to it and/or adjust numbers and decrease expenses if necessary. Have this information ready when you call so you will have accurate information. Please be reminded that if you want to have your mortgage payment lowered, you must be willing to make some sacrifices. It will be difficult to get a mortgage modification if you have excessive luxury expenses.
3. Last 4 pay stubs from each of your income sources
4. Last 6 bank statements (if you are self-employed or receive direct deposit, this will be important -- you are self employed, gather 12 bank statements just in case)
5. 2009 and 2010 W2 forms AND complete signed tax returns (in addition, provide a copy of your 2011 W2 when you receive it)
6. Mortgage Statement
7. Proof of Homeowner's Insurance - Declarations Page with the total annual premium
8. Last real estate tax bill
9. Market Analysis on the residence (optional: real estate agents can do this for free for you -- give them the address of the property, number of bedrooms, number of bathrooms, type of house, garage car count, basement finished or unfinished, approximate square footage)
PART TWO: GET YOUR FACTS STRAIGHT
1. Get a spiral notebook and record everything everyone tells you about your mortgage during this process. Keep dates, times, etc.
2. Call your lender and get the name, employee id, phone, fax and email of the person you speak to. You may not be able to get the phone number, because they are often working in call centers, but ask anyway.
3. Ask your lender what type of loan you have: FHA, VA, or Conventional.
4. Ask your lender who is the investor on your loan. It can be the lender, Freddie Mac, Fannie Mae, Ginnie Mae, or another private investor. This is important because ultimately, it will probably be your investor who gets to make the decision on your loan modification.
5. Be prepared to state your hardship (same information as Part One, #1). Be honest. God can't help you if you don't put all of your cards on the table. If you lost income in your household or your expenses increased for some reason, be prepared to share details.
6. Ask your lender what are the steps to consider each of the following: a loan modification, an interest rate reduction, a principal reduction, a loan workout plan, a deferment of payments, and a forbearance. If you are NOT behind on your mortgage, ask about a streamline refinance (in most cases, a streamline refinance requires no credit check, no documentation of income, and no documentation of assets).
7. Ask your lender if there are any options that they cannot tell you about unless you ask them first. If they say yes, ask the about those options (sometimes the investor has authorized certain solutions, but they may only be available if you ask). For example, if you can't pay your rent, the property manager isn't going to tell you to pay less, but if you explain your situation and ask for an extension on your due date, the property manager may get an okay from the landlord.
PART THREE: GET SOME HELP AND GET BUSY!
1. You can send this information directly to your lender via the instructions provided during your telephone conversation. Make several sets of copies of your papers, because you may need to send this paperwork to different agencies and you may need to send this paperwork for different properties that you own. When you send your paperwork in, make sure you write your name, your Lender's Name, Loan Number, and Property Address on EACH AND EVERY page. If you are working with a housing counselor and you need to send them the paperwork, write the case number or id number on each page as well. Follow up every week and be prepared to send the paperwork again if you have to.
2. You should strongly consider registering with a HUD Approved Housing Counselor for FREE. Many people are expressing difficulty in getting a response from their lenders. It may help to have someone advocating along with you. Here is a list of HUD approved housing counseling agencies here: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
3. Understand that this process may take several months or even several years, but the key is this: do not stop communicating. Call your lender weekly or even a couple of times per week. Verify and re-verify the information your receive by calling back and speaking to another representative. As the representative to repeat what information they have written in your notes before you hang up the phone and feel free to tell them what to add, delete, or modify. Yes, with faith, persistence and knowledge, you may be able to modify your mortgage and enjoy great peace.
For more information, please contact Lynn Richardson at firstname.lastname@example.org or 866.OCCUPY1 extension 800. Minister Lynn Richardson is the Chief Operations Executive, Chaplain and Celebrity Financial Coach for the Hip-Hop Summit Action Network, co-founded by Russell Simmons and Dr. Benjamin Chavis. A highly sought after speaker, author and expert on money matters who has been featured in Essence, Jet, on the Tom Joyner Morning Show and at churches and congregations across the country, Minister Lynn uses her quick wit and humorous presentation style to help others end their battle with money and achieve personal, professional, and spiritual harmony. Minister Lynn completed a Masters in Urban Ministry, Summa Cum Laude, at Trinity Evangelical Divinity School and is a member of New Faith Baptist Church International under the leadership of Rev. Dr. Trunell D. Felder and Rev. Dr. Alexis L. Felder.