Loan Modification – Do it Yourself Guide

You’ve cut back where you can, but you’re still having trouble paying the biggest bill of the month, your house payment. You’ve heard about mortgage relief and know it could make you solvent, yet the people who have approached you want thousands of dollars up front just to talk to your lender, money you simply don’t have.

First understand your options. You’ve got several so read the explanations behind these links. If you want to stay in your home, a refinance is your best choice because it will actually improve your credit rating.  Loan modifications are better than falling behind. They are not automatically flagged as negatives on your report, but could potentially hamper your ability to get a future loan with a marginal application, because you’re altering your loan’s terms.  A short fi would also allow you to keep your home but it is a negative on your report, because you’re asking your lender to take less principal than originally agreed. If homeownership is now beyond your means, look into a short sale to avoid foreclosure.

Taking a deep breath, you decide to tackle a loan modification yourself. What do you do? What should you expect?

Recognize that the entity that provided your home loan is not necessarily the one that now handles it. A short time ago, Countrywide and Washington Mutual were two of the biggest mortgage lenders. Countrywide is now owned by Bank of America and Washington Mutual by JP Morgan Chase. Even if your lender is still in business, there is a good chance that your loan is now handled by a mortgage service provider, or servicer. provides a list of contacts for major servicers with their policies and procedures. A simple option is to look at your bill and note the name and phone number on it. When you call, you’ll be asking for the loss mitigation department to request a mortgage modification.

Before you pick up the phone or send an email do the following:  Open a file for all of your correspondence. If you keep records in MS Outlook, start a contact there with all of the information you have. Save any emails or hard copy forms or letters. Photocopy any forms you fill out before sending them back. Be sure to back up any computerized data, so you don’t lose a byte.

At the very least use a new spiral steno pad to record the full date and time of every call you make as well as fax, email and letter you send. Be sure to note the full name or identification number of the person with whom you speak as well as what transpires. Whenever possible, get a time frame for the steps required. For example, if a servicer requires that you fill out a specific form, ask when you can expect to get it. If you don’t receive it by that date or time, call back.

Be patient. Most servicers are simply overwhelmed by requests to modify mortgages. Expect to take several attempts to get to the right party. Try calling at off times, early or late in the business day to get through. Even a Congresswoman calling on behalf of her constituents can get the runaround. Watch this video about Hon. Maxine Waters’ efforts.

Assemble what you need ahead of time. Here’s a list of what you’ll have to gather for a loan modification. Hardship is an essential element. This posting gives you the basics.

Sometimes the task can be daunting.  Consider getting help from a non-profit organization. Here are a couple, recommended by the California Department of Real Estate:
the Federal Housing Administration’s National Servicing Center, NSC, and the Home Ownership Preservation Foundation

If at all possible, keep making your mortgage payments on time. Simply applying for a loan modification is no guarantee that you’ll get it. Expect to take a minimum of 45-60 days to see the process through.

Finally, stay hopeful. This is a rough patch for millions of Americans. Remember that you are not alone.

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