Mortgage Modification Loan

If you find yourself unexpectedly unable to keep up with your monthly mortgage payments, you are one of a hugely growing number of people. Foreclosures are on the increase at a massive rate, while the price of houses is falling through the floor. This guide is essential reading for anyone in difficulty with mortgage payments.

The first step is to find yourself a reliable Financial Advisor from a company that is well rated by the Better Business Bureau. The number of such companies is rising with new ones listed in the yellow pages all the time! Alternatively, you may be referred for free advice from your local HUD, where a professional will talk over your circumstances with you and advise you on the best way to proceed.

If your financial counsellor advises that a  mortgage modification loan will work for you, the second step will be to write what is known as a hardship letter to your creditor. Your counsellor will be able to assist you with this and in addition, there are plenty of websites where you will find free templates. Essentially, this letter ought to be a breakdown of the financial reasons that you cannot afford your mortgage payments.

The third step is to provide the appropriate financial documentation, such as tax returns, statements of earnings and any other information that could account for financial difficulties. This could include invoices for medical treatment or documents that indicate a significant change in circumstances, for example a divorce. These items are usually filed with your letter of hardship. The Homeowner Stability Initiative, a scheme setup by the Making Home Affordable program requires a proof of your monthly incomes (before tax).

The most common means of a mortgage modification loan (there are a lot) came into operation on March 4th this year. That is the Making Home Affordable program in which eligible homeowners and modify their loan such that their payments do not exceed 31% of their gross monthly income. This scheme will operate until 2012 and anyone whose income has suddenly reduced, for example as a result of redundancy at work, you could qualify.

The Making Home Affordable scheme includes $75 billion to provide as incentives to both participating lenders and homeowners too and is only currently available on loans funded by Fannie Mae and Freddie Mac. If your creditor is not one of these, it is worth enquiring with your creditor, as many lenders have other mortgage modification loan options available.