Do it Yourself Loan Modification

by admin on February 22, 2009

Tired of paying 9% interest on your adjustable rate interest only loan? Get stuck with a negative amortization loan that has prepayment penalties? If so, you are the perfect candidate for trying to get a loan modification. There are a few steps that you need to go through to do a Loan Modification, here is a brief outline to get you started:

#1 Create a Journal: Use this to take notes on all your conversations, emails and faxes that you send back and forth between you and your lender. You can take notes online in Microsoft Word or offline in a spiral notebook. Either way, you’ll be very happy you did this, if you get 1/2 way through the process and find that you need a loan modification lawyer to help you out.

#2 Do Your Homework: Before you start sending off letters to your lender, it pays to take a couple hours and read stories about other people in your same situation and find out how they asked their lender for a loan modification. A great place to get insight and learn more are in online forums. LoanSafe.org runs a great forum with lots of useful information. They have sections for almost every lender – dive in their to start and get names and phone numbers so you know who to contact.

#3 Write a Hardship Letter: It pays to take the time and write an excellent hardship letter that takes into account the hardships you’ve endured that have caused you to seek a loan modification. Make this letter concise – not overly wordy and get it proofread by at least 2 other people.

#4 Contact Your Lender: After you’ve gone through steps 1-3 you’re ready to start making contact with your lender. Give them a call and find out the proper address for you to send in your hardship letter. After you send your letter in, you’ll need to call the bank and find out if they got it and how long it’s going to take for them to get back to you. Stay on top of the process – you are the driver and need to keep pushing things forward, the lender might try to stall so keep momentum moving forward.

#5 Find Out if You Need to Keep Paying Your Loan: Some banks will tell you that you can stop paying your mortgage during the loan modification process, but then they will go ahead and charge you fees, penalties and extra interest on top of it. If you feel confident the bank doesn’t want you to pay your mortgage, at least set that money aside somewhere in a savings account so you don’t spend it. You will have to pay your back mortgage at some point so that money is very much needed.

#6 Don’t Always Accept the First Offer: Obtaining a loan modification is very much a negotiation process. Your lender may float you a first offer that is very unpalatable. Don’t be afraid to reject it if you think it’s unfair. Keep the lines of communication open with your lender and see if you can get a second offer.

#7 If you get Stuck, Consider Getting Help: You may get 2/3 of the way through the process and then your lender shuts down all lines of communication with you. This can be very frustrating and has happened to many people. If you keep trying and can’t get your lender to start talking, it may be time to seek professional assistance. There are many lawyers out there that can help guide you through the loan modficiation process and can add some weight to your words.

#8 Share Your Pain: Don’t go it alone. If you have a husband, wife, significant other, good friend, etc. it would be a good idea to let them in on what you’re going through. The process can be painful and frustrating – dealing with any large corporation can be a lesson in exhaustion, so talk to people you trust and bounce ideas off them.

#9 Celebrate Your Success: If you get through this and obtain a loan modification, treat yourself to something nice. It’s important to reward yourself for hard work. It would also be a good idea to give back to the community, take 20 minutes and write a post at a forum or on this site about the steps you went throught, what worked and what didn’t work. Your thoughts will help others tremendously.


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