Should You Apply For a Traditional Loan Modification?

If you are seriously late on your mortgage payments and facing foreclosure, you may qualify for a traditional loan modification. Modifying your current mortgage is a great way to put an immediate end to the foreclosure process, and there’s a good chance you will qualify if you can prove that you can’t afford your current mortgage payment. People all over the country are using this option to stay in their homes, particularly in states with very high foreclosure rates such as Nevada and Arizona. Loan modifications don’t always go through, but they can buy some valuable time while other options are explored.

How to Get a Traditional Loan Modification

You can get a loan modification by contacting your lender and requesting it. There will likely be lots of paperwork to fill out and you’ll have to make your income and tax information available to your lender. Some lenders, such as popular mortgage company Wells Fargo, also require a letter of hardship, which should state exactly why you fell behind on your payments. Your lender might additionally request a financial worksheet from you showing the total amount of all your bills for the month to help them assess whether or not you can afford your mortgage. After all this documentation is received, you will probably have to make three trial payments to the mortgage company. If you make these payments successfully, your loan may be modified with a lower payment and interest rate, but there is never a guarantee that your modification will go through even if you do make the payments on time.

Another Loan Modification Option

If you don’t trust your mortgage office to handle your modification, you can get a wholesale loan modification instead. A wholesale modification works in almost the same way as a traditional loan modification, but instead of going through your mortgage lender, you use an outside party to conduct the modifying process. In many cases, this outside party is an attorney’s office or at the very least an independent modification company who uses an attorney. Be sure to protect yourself and check with the Better Business Bureau before being too trusting of any independent loan modification company because there are some out there looking to rip desperate homeowners off.