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What to Expect in an Application for Home Loan Modification

Various options for home loan modifications exist for borrowers facing foreclosure.  Assistance is offered through the individual lender and, in many cases, through the federal government.  The first step to being approved for a loan modification is to fill out an application for home loan modification, which is available from the lenders.  Applications available through lenders include those for in house assistance and those for federal assistance.  Borrowers should NEVER pay for an application for assistance and any effort to collect money for an application is a scam.

The application for home loan modification will often require the borrower to do a little bit of research into their own financial history for information like their gross income.  This information can be pulled from the most recent tax returns filed with the IRS.  It is important that the information is accurate because any false information, knowingly falsified or not, could be enough of a reason for a lender to deny or postpone a claim.

Borrowers may or may not be surprised to see how personal the questions on the application can get, but this is only because the lenders have to be certain that the person requesting assistance is actually in need of it.

The application process will also usually include copies of other financial documents like pay stubs, bank statements, and monthly bills.  All of these numbers will be calculated together in order to give the lender an idea of how much help their borrower needs.

Lastly, the borrower will need to submit a hardship letter, which is nothing more than an opportunity for the borrower to put their request in their own words and to justify their request to their lender.  The hardship letter should be no more than a couple of detailed paragraphs, explaining the exact reason for the loan modification, how the loan modification will help get finances back in order, and brief plan for staying out of future debt.

If everything goes according to plan, the borrower will have an answer on the status of their application within a few months.  Unfortunately, things rarely go according to plan.  Borrowers are urged to keep duplicate copies of every document they submit to their lenders since lenders are notorious for “misplacing” important documents necessary to determine the borrower’s eligibility for a modification.  Borrowers are also urged to begin keeping hard copies of all of their incoming bills and bank statements readily available because, in many instances, when the process is delayed by the lender, the lender will require the borrower to re-submit more current copies of documents already submitted.

It is recommended that a borrower filling out an application for home loan modification seek the assistance of an attorney who can review the application prior to submission to ensure that it is free of errors and contains all required documentation.  Applications are denied or delayed every day because borrowers experiencing an increased level of stress failed to complete the process correctly.  Don’t forget that the only thing standing between a foreclosure and a modification is the application process.  The application should be treated as one of the most important documents the homeowner will ever fill out.