Don't Go into a Gun Battle with a Butter Knife (Part 1)

Who can believe that after four years homeowners and their lenders are still trying to get on the same page when it comes to dealing with underwater mortgages. Several programs by the government like the HAMP and HAFA programs meant well but was met with opposition from lenders and servicers.

Without any strict enforcement, lenders and servicers have sent distressed homeowners in a never ending circle of frustrating processes to get loans modified. While the government had high goals of modifying over 20 million loans over the past four years, only a fraction of that really occurred.


I have personally helped over 200 homeowners modify their loans, many of which would have probably been foreclosed without my help. I have seen and heard horror stories of homeowner's paperwork being lost, loan packages stalled at the negotiator's table, and homeowner's being offered worse terms than their original loan after years of processing.

If you are still one of the millions of distressed and upside down homeowners battling to save your home, here are some tips to help you deal with your lender while you are processing your modification.

Package your Modification Correctly the First Time - The lenders need more documentation now when you are modifying your loan than when they originated the loan in the first place! How ironic. Collect all these items in the beginning and fax them to the lender's Loss Mitigation Department;

- Income Documents like your 2 most recent pay stubs, or any benefit statements if you are receiving SSI Disability or Unemployment Benefits. Don't forget to send your last two years tax returns or extension form 4868 if you haven't filed yet. They will also need your last two months bank statements. If you are self employed, provide a profit and loss statement covering your last three months showing your NET income.

- Document what happened in a short and concise Hardship Letter. Do not write a 5 page dissertation, they will not read it. Write a one page letter in 3-4 paragraph detailing what happened to cause you to fall behind in payments, how you have worked to deal with the situation, and how you want the lender to modify the loan.

- Download a personal financial statement detailing your income and expenses. The financial worksheet that comes with the HAMP borrowers assistance does not provide line items for many things like utilities and food. It also requires you to put down your gross income instead of your net income which is more accurate. If you provide your own personal statement to go along with your package, this will give the lender a better snapshot of your financial situation.

Fax ALL of these documents TOGETHER to the direct fax line to the Loss Mitigation Department of your lender. If you do not know it here is a link to all of the lenders contact information. http://www.operationrest.org/ImportantNumbers 

I will provide tips for the next steps in a separate post. Remember, the lenders are looking out for their best interest and you need to be prepared to look out for yours. If you have any questions or would like a FREE assessment of your situation, contact me at info@myforeclosureconsultant.com