Tips for Filing for a Home Loan Modification

People across the country are still losing their homes at alarming rates. Some are looking to the government’s HAMP (Home Modification Loan Program) for help, but are finding it difficult to qualify. While many banks and lenders are now on board, it is still a complicated and long process to a permanent loan modification. Paying close attention to all the details of the process will be important for qualifying.

If you are contemplating applying for a home loam modification under HAMP, there are some things you should know. Becoming educated on the process and the qualification requirements before applying will greatly increase your chances of a permanent modification. If you apply without any knowledge of the process, your chances of not being approved are high.

Qualification criteria that lenders look at include your debt-to-income ratio, proof that you have suffered from a financial hardship, what your monthly income currently is, your work history and tax return information.

According to reports released this month, to date about 23% of all people who apply for mortgage modifications have not qualified for permanent loan modifications. Those that were disqualified either did not make their payments during their trial modification period or the homeowner did not complete the paperwork process by having the documentation needed to qualify. Some however, are puzzled and frustrated that they are not approved. Advocates for the program are also frustrated at the high number of people who are not approved.

The cancellations could reflect a mistake on the part of the lender or that they lost the homeowner’s documents, said Julia Gordon, a senior policy counsel at the Center for Responsible Lending. “There is no way to know what lies behind those numbers. . . . It could be that the person had reduced work hours” after entering the program, she said. “I think there are a lot of people at risk of foreclosure whose homes could still be saved who are not being helped fast enough.”

Bottom line, if you are looking to HAMP for a means to keep your home, do your research, complete all paperwork and provide all required documentation and make sure that you do not miss a payment once you are in your trial period. While there are no guarantees, if you follow these guidelines you are more likely to receive a permanent qualification.

For more information on filing for a home loan modification, click here.

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