Loan modification is one of the many options offered through your servicer’s loss mitigation department. It may help a struggling homeowner facing financial hardships keep current on payments and avoid foreclosure.
Gather all necessary documents and fax or mail them to your servicers. The process of loan modification will only be started then. Here is a list of loan modification fax numbers for some of the biggest lenders and servicers in the nation.
|America’s Servicing Company||866-590-8910|
|Bank of America||800-658-0395|
|Caliber Home Loans||405-608-2011|
|EMC Mortgage Corporation||214-626-4702|
|Green Tree Servicing||877-612-2422|
|HSBC Mortgage Services||888-629-8590, 732-352-7519|
|Midland Mortgage Company||260-459-5390|
|Sun Trust Mortgage||804-745-8115|
Loan Modification FAQs
To help you understand well, we are also providing you with some frequently asked questions and their answers on mortgage modification.
Are loan modifications a good idea?
A loan modification may be an option if:
- You are ineligible to refinance
- You are facing a long-term hardship
- You have defaulted on your payments or likely to default soon
A loan modification program seeks to change the original terms of the promissory note through a written agreement between the borrower and the lender. The changes aim at making the mortgage payments more affordable.
Can loan modification reduce principal?
Through the changes in the loan documents, you may be able to
- Get the mortgage loan type changed (e.g. from ARM to FRM)
- Lower the interest rate (temporarily or permanently)
- Lengthen the repayment term (e.g. from 30 yr to 40 yr)
- Adding any past-due amounts, such as interest and escrow, to the unpaid principal balance, which is then re-amortized over the new term
- Reduce the principal balance
Typically, the first three are the most likely changes your lender may like to approve on your existing mortgage.
What are loan modifications? What is HAMP?
Three kinds of loan modification programs exist – government-backed programs, such as Home Affordable Modification Program (HAMP), Fannie Mae and Freddie Mac loan mod programs (such as Streamlined Modification Initiative), and the lender’s own loan modification programs.
Under HAMP (which came into existence in 2009 as a part of the government’s Making Home Affordable Program), a homeowner can have the payments reduced so that these are 31 percent of their pre-tax monthly income. Note that not all lenders participate in HAMP and also not all can qualify for the same.
Who is eligible for mortgage modification?
The eligibility criteria for HAMP are as follows.
- The loan must be owned by Fannie Mac or Freddie Mac.
- Only the loan originated on or before Jan 1, 2009 will be considered.
- The loan amount must not be more than $729,750.
- The borrower has enough documented income to make the modified payment.
- The borrower must show proofs of a financial hardship that has made the borrower delinquent or in danger of becoming delinquent on mortgage payments. The borrower must sign an affidavit to that effect and provide ample documentation.
Contact the loss mitigation department (or home retention department) of your servicer to get started with your loan modification options.
What is a mortgage hardship?
A mortgage hardship refers to a financial situation when you are unable to make payments. This is usually a temporary situation arising out of some unexpected events, such as unemployment, illness, death, and emergencies. You must document these hardships with paystubs, bills, and other paperwork, and submit the same along with a hardship letter while applying for a loan modification option.
What is financial hardship documentation?
A loan modification application must include the following.
- A completed application
- Recent paystubs for salaried employees and a profit and loss statement for self-employed
- Bank, credit card and loan statements
- A list of assets and their estimated values
- Tax returns
- Income/expense financial worksheet
- A hardship letter or hardship affidavit
Once you have all the documents ready, you can call the mortgage servicer on number that you find on your monthly bill. You may also talk directly to a loss mitigation representative.
You do not need to be late on your payments, but you must show that you are likely to default on payments if assistance is not provided. You may hire an attorney to help you through the process or call your local HUD-approved counseling agency.
Are loan modifications permanent?
You are initially offered a three-month trial period. If you are comfortable with the modified payment, you may be approved for a permanent loan modification agreement.
Can loan modification stop foreclosure process?
True, loan modification is one of the many ways to prevent a foreclosure. However, it cannot guarantee that the foreclosure process will immediately stop.
Can loan modification be denied?
Yes, it can be denied if you do not meet the criteria set by the lender.
What to do if mortgage modification is denied?
You may file a Chapter 13 bankruptcy to immediately stop foreclosure proceedings. You can use the time to catch up on mortgage payments that are behind or have the modification finally approved by the lender.
Can loan modification affect my credit? How does loan modification affect credit score?
Loan modification through government programs, such as HAMP, may have no impact at all on your credit. This can’t be said to other programs specific to your servicer. During the trial period, your modified payment is usually lower than the usual payment. This might be reported by your servicer as if the borrower has been paying less than the amount owed.
Can loan modification be done twice? How many loan modifications are you allowed?
Yes, it is possible to reapply for another loan modification after you have defaulted under HAMP. It is, however, only rare that you will be approved for a third time.
I have a loan modification. Can I refinance?
Yes, it is possible to refinance a home that has been in modification. However, the odds depend on your present financial conditions and your ability to make payments under a re-amortized payment schedule.