The Loan Modification Process: Get a Deal to Save Your Home

loan modification process

Despite your best efforts, you’ve missed months of mortgage payments. You’re getting large packets of mail from your lender and don’t understand what they mean. By now you may have gotten a notice of intent to foreclose. Somewhere in the mess of letters and papers, you start to see the words “loss mitigation” and “loan modification.” You begin to look at the massive amount of paperwork required in the loan modification process, but it looks complicated and confusing. You’re not sure what is the best way to save your home.

Loan modification is a powerful tool that you can use to avoid foreclosure, without having to file for bankruptcy. But the loan modification process is complex and can be overwhelming. If you are trying to modify your home loan on your own, you are likely to run into all sorts of problems. That’s why it’s crucial to hire an experienced attorney who specializes in this area. By working with an experienced professional, you can rest assured that the process will go as smoothly as possible-and that you have the best chance of getting approved for the right loan modification.

Steiner Law Group has extensive experience with the loan modification process. We know the hurdles involved in the loan modification process-and have experience with overcoming them.

Modifying a home loan may be your best option to save your home, but once a certain point in time is passed, it is highly likely your only solution will be to file for bankruptcy. That is why the time to act is now. In this article, we are going to break down the 6 stages involved in the loan modification process and explain, in each stage, how the right attorney can help.

1) Talk to Your Servicer and Request Application Materials

The first step in the loan modification process is to contact your servicer. Specifically, you will have to ask for the “loss mitigation department.” This department is sometimes also called “home retention.” You will need to do this to obtain the loan modification application materials.

You will also have to look over all the various, inconsistent pieces of mail sent by your lender.

At this stage, a qualified loan modification attorney can help you decipher all the letters and packets of mail sent by your lender. It is important to note that once the application process has started, your mail will increase twofold.

2) Keep Track of Dates and Deadlines

While involved with the loan modification process, you will likely be given all sorts of dates and deadlines-ALL of which you will have to keep track of. You will need to record the various dates of foreclosure activity, and all sorts of deadlines when different options are due.

You will be told things like this – You can request a modification 90 days or more before a foreclosure sale, but a servicer may require you to accept or reject the modification offer within 14 days. But if you apply less than 90 days before a foreclosure sale, your servicer may require you to accept or reject the offer within 7 days.

That’s a lot to keep track of! And missing a critical step could cost you your home.

A competent loan modification attorney will help you keep track of these dates and ensure all the right information is submitted at exactly the right time.

3) Fill Out Your Application and Gather All Documents

The application will require you to submit all sorts of documentation. Your servicer will need:

  • A completed questionnaire with personal, property, and mortgage information
  • Bank statements
  • Tax returns
  • Pay statements
  • An Income and expense financial worksheet
  • A Hardship Letter

Hardship Letter

A hardship letter explains why you fell behind on payments. It is the chance for you to tell your story. You can explain how circumstances made you unable to keep up with your mortgage payments. It includes specific details, such as the date the hardship started and how long you expect it to continue. You also give specific information about how modifying your loan will help you keep your home.

It may be challenging to decide which details to include in a Hardship Letter and which to leave out. That is where a knowledgeable attorney can help.

A Good Lawyer Will Help With Your Documentation

One of the first things a competent attorney will do is help you write a hardship letter. It is your attorney’s job to help you draft a letter that is clear and concise, and that accurately reflects your current financial situation. In addition, your attorney will be able to provide guidance on what information to include in your letter. By working with an experienced professional, you can be sure that your hardship letter will make the best possible impression on your lender and that you are taking the necessary steps to save your home.

Additionally, a loan modification attorney will help you keep track of all the required documentation. They will keep in contact with your servicer and tell you what you need to submit, when to submit it, and how to submit the documentation that your modification is dependent upon.

4) Receive and Sign the Agreement

In the next stage of the loan modification process, you will be notified in writing of whether or not you got approved. It is inconvenient for your lender to foreclose, so they are motivated to approve your application. If approved, you will review the documentation, sign and notarize it, and send it back.

However, lenders often over-complicate the loan modification process until the very end. They may request more information and send more documents to fill out.

Sometimes, it can be tough to see whether or not you have even gotten a good deal. It may be tempting to sign whatever relief option is thrown your way. But this is often a mistake. Sometimes payments are only reduced by a few dollars a month, which practically helps no one.

A Good Lawyer Will Iron Out the Best Deal

An experienced loan modification attorney will work with you throughout the entire loan modification process, to ensure that you are prepared if your lender throws you any curve balls.

They will also iron out the best deal possible for you. They will speak with your lender on your behalf and negotiate the right deal so you can get that much-needed relief to save your home.

5) Trial Period

Once you have signed and resubmitted the loan modification offer, you will enter into a trial period or Trial Payment Plan (TPP). This is a period (usually 3 months) where you essentially prove to your servicer that you can make the modified loan payments. During this stage in the loan modification process, your lender cannot foreclose on your home-provided you make the payments.

This is where having the right loan modification is vital-if you get a deal that does not actually help you, you will be unable to complete the trial period and you will be back to square one.

6) You Have Completed the Loan Modification Process: Your Loan is Now Modified

After you have completed the trial period, you will receive documentation within 45 days. Once you have signed and mailed that, your loan modification is complete!

The lender will remove you from default status in their system and terminate any foreclosure activity!

What if I Did Not Get Approved?

While it is more common to get approved for a loan modification, rejection does happen. Here are some common reasons why a loan modification might not get approved:

  • Submitting incomplete documentation
  • Failure to make payments during the trial period
  • Not signing and returning documentation on time
  • Failing to resolve outstanding liens

As we have stated, an experienced loan modification attorney will work with you to ensure you submit complete documentation on time and receive a loan modification beneficial enough to allow you to make payments.

Worst-Case Scenario

If you are still denied, however, filing for chapter 13 bankruptcy will likely be your best bet. This is why it is important to have an attorney who specializes in bankruptcy as well as a loan modification.

Steiner Law Group is experienced with loan modification, bankruptcy, and foreclosure, so you will always have backup options to save your home.

Contact the Right Attorney

To recap: loan modifications are complicated and difficult to do on your own-and time is not on your side. This is not a process you can afford to botch.

Working with the right loan modification attorney will ensure that all deadlines are met, all the right paperwork is submitted, and you get the best deal possible.

Steiner Law Group Will Help You Save Your Home

Steiner Law Group is here for you! For over a decade Steiner Law Group has been successfully helping hundreds of Maryland residents to get their finances in order and save their homes!

Steiner Law Group will oversee the entirety of your loan modification process-from helping you get the proper documents submitted on time, to writing hardship letters, to negotiating with your lender. Getting the right loan modification will make a real difference for your finances and can be the only thing standing between you and foreclosure or bankruptcy. With Steiner Law Group, you can rest assured that you are in the right hands.

By working with Steiner Law Group, you can be sure that you are taking the necessary steps to get the best possible outcome for your case and save your home!

Avatar of Eric Steiner, Esquire

About Eric Steiner, Esquire

Mr. Steiner graduated from the University of Michigan Law School in 2006. Since then, he has focused his practice on bankruptcy, real estate, commercial and consumer collections, including representing the third largest lender in the greater Baltimore area.