What You Need to Start the Mod Process

Every lender in the country has a Loss Mitigation department. As of right now, that department is tasked primarily with the job of reviewing loans for possible modification. While all lenders approach this task from different angles, and with different criteria, there are a few items that you will need to have ready to satisfy all of them.

The most important piece of your modification package is your Hardship Letter. No matter who your lender is, they will all ask for this, and usually before they ask for anything else. A properly formatted Hardship letter is critical to having a mod either accepted or denied, so this should be the document that you spend the most time on to ensure it is as good as it could possibly be.

Financials are the second thing asked for, and nearly as crucial as the hardship letter. What the lender is looking for is an accurate depiction of what your outgoing expenses are on a monthly basis. Everything you spend, from bills to groceries to entertainment on a monthly schedule must be represented here. This is where people often make mistakes when trying to get ‘creative’ with the budget they submit to the lender.

Supporting documents will fill out the rest of the list here. This will include paystubs, bank statements, tax returns, etc. A basic rule if thumb is to multiply everything by 2. 2 months paystubs, last 2 months bank statements, 2 years tax returns, and so on. I don’t recommend just gathering everything and sending it all to the lender though. When talking about supporting documents, only send in the documents they ask specifically for. If they ask for last years taxes, don’t send them the last 2 years. If they ask for 1 month of paystubs, don’t send your bank statements as well. Sometimes less really is more. Just make sure that you have these documents, just in case they do ask.

All lenders approach modifications differently, but all with the same goal. They want to make sure they only have to do this once, and keep from having to foreclose. Knowing what to have on hand, and how to answer their questions is the most important, and one of the mistake ridden, things a homeowner can do to ensure they get the mod they need. Getting it done takes planning and preparation, so make sure you take the time to get all your ducks in a row before the first call is made.