Do I meet the criteria for a mortgage modification - By: Robert Thomson, Posted on: 2008-07-21

In many occasison a homeowner is set up on a forbearance plan prior to executing a mortgage modification which allows a servicer to monitor the economic condition of a homeowner during the repayment plan period to be sure the homeowner will be able to make payments to the lender. There are significant documents required that are reviewed by a servicer

Hardship Letter:
To qualify for a mortgage modification homeowner must have a valid hardship. The hardship must be known and given as many details as possible to sustain your case. A is extremely biased and pretty much a requirement in the process of getting a mortgage modification. There are a few hardships that are considered charitable and do not qualify quitting employment or reducing the amount of hours worked are typically not accepted. The hardships are known and if there is an additional default the homeowner can not use the same reason for default otherwise their previous hardships was really not over and in many instances the homeowner is denied a loan modification.

Financial Statement:
This is used to determine the homeowner ability to pay. This is usually the first form looked over by the lenders mediator. This form must clearly indicate monthly pay and everyday expenditures as well as current assets and liabilities. This is what makes and breaks the entire loan modification review. This form also shows whether or not the homeowner will be able to make payments if the loan is modified. There must be a excess pay at the end of the loan modification or else the plan will be denied. The plan must be affordable. If a homeowner is severely over-leveraged with debt there is little chance that a loan modification will cure the delinquency. Monthly everyday expenditures are reviewed to determine what bills are necessary and what are unnecessary. Necessary everyday expenditures are food, utilities and gas and an example of unnecessary are entertainment everyday expenditures, expensive phone plans and unsecured debt. Household everyday expenditures loan payments, utilities, and taxes take up most of the monthly budget. Do not make expenses look unreasonable will be a red flag to get further detail. The negotiators will always look for assets that can be liquidated.

Proof of Income:
The proof of pay is usually a paycheck stub, a P&L Profit and Loss Account if self employed, or checking account report showing paycheck deposits. The proof of pay is required to prove the homeowner has steady pay. The homeowner must also give frequency of pay. The proof of pay must correspond with the pay shown on the financial report. Resolve any discrepancies

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