Home Mortgage Refinance – Loan Modification – Modify Mortgage Terms

Those borrowers who have been beating their head beside a brick wall trying to get their home loan modified with their mortgage holder will be thankful to learn of the new federal loan modification process initiated just last month. The Federal Treasury Department has reacted to the really low rate of permanent modifications being offered to struggling homeowners with a new, streamlined process that offers less paperwork and shorter turn times.

The miserable success rate of the federal loan modification plan, HAMP, has lenders, servicers, homeowners and Treasury Department all pointing fingers at each other in an attempt to explain the low numbers of permanent loan modifications. There is still over $73 billion dollars accessible to fund HAMP, why is this money still sitting there and not being used to help the deserving borrowers facing foreclosure and the loss of their home? The problem seems to have been a program that required too much paperwork from borrowers, too much underwriting from lenders and servicers, and constant revisions to the government guidelines.

Now, effectual April 5, 2010, new guidelines and timelines kick in, and the hope is that more homeowners will at least know where they stand quickly-whether they qualify for HAMP and a loan workout or if a stately exit strategy is their best option. Here is what homeowners need to do in order to get their loan modification answer within 30 days:

1. Contact their lender/servicer and request deliberation for HAMP
2. An application package will be mailed out to the borrower, or it can be downloaded on the lender website
3. Homeowners must complete a 3 page application, counting a financial statement detailing their income and expenses. This is important information and will used in evaluating whether the borrower meets the federal approval formula for HAMP.
4. Send in the application along with 30 days of paystubs, a signed Hardship Affidavit, and a signed 4506t form (provided with application)
5. Upon receipt of a COMPLETE loan modification application, lenders now have just 30 days to respond to the homeowner with an answer-either off a loan workout or offer other solutions-such as short sale or deed in lieu of foreclosure.

Know the Guidelines

The vast majority of homeowners are hoping for loan modification approval, but unfortunately many will not qualify simply because their application did not meet the federal guidelines for Home Affordable Modification Program approval. There is actually a mathematical equation that is used to determine who will qualify for this very affordable loan workout program. The goal is to modify those borrowers who can prove that they fit into this standard formula.