Loan Modification Documentation Checklist
Once you’ve decided you’re ready to apply for a loan modification, you may be wondering what sort of documentation is required to start and complete the process. The simple fact of the matter is this… applying for a loan modification is similar to applying for a loan – your lender wants to see a short stack of documents proving your need for a loan modification and your ability to afford any lower monthly mortgage payment that may result from the loan modification.
Most lenders require that you submit the following documents:
- Hardship letter describing the event(s) that triggered your inability to make your mortgage payments.
- Copy of any documentation supporting your hardship claim, such as hospital bills, a pink slip from your work, or divorce papers.
- Borrower information sheet (sometimes referred to as a financial worksheet) showing your income and assets, similar to the Uniform Residential Loan Application – 1003 you completed when applying for your loan.
- Copy of past two years’ federal income tax returns.
- Copy of past two years’ W-2 forms.
- Copy of past two months’ bank statements. (If you have a pile of money sitting in the bank, the lender is less likely to grant you a loan modification based on hardship.)
- Copy of past two months’ pay stubs showing income from your job.
- Copy of most recent mortgage statement.
- Copy of most recent property tax statement (if escrow payments for property taxes are not shown on your mortgage statement).
- Proof of homeowners’ insurance (if escrow payments for homeowner’s insurance are not shown on your mortgage statement). Your insurance agent should be able to provide you with what you need.
- Current financial statement (sometimes referred to as a financial worksheet) detailing your monthly income and expenses and showing how much you are coming up short each month with the current house payment.
- Projected financial statement detailing any changes to your monthly income and expenses and the payment amount you will be able to afford assuming you obtain a loan modification.
- Any letters from credit counselors demonstrating your commitment to getting your financial house in order and what you are currently doing to achieve that goal.
- Cover letter or form explaining why you’re submitting all these documents and providing a list of all documents included in the package. Make sure the cover letter includes your name and account number.
Prior to submitting your application, make sure you have signed all documents that require signatures. Your significant other may need to sign, as well, assuming his or her name is on the original mortgage. You may also want to include your loan number on copies of all documents in the package.
Keep in mind that you may get only one shot at having your application approved, so make absolutely sure you follow your lender’s instructions to the letter and include each and every document the lender requests in whatever form specified.
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Ralph R. Roberts, GRI, CRS |
