Loan Modification Documents Checklist

You’ve hit hard times recently. And now, you’ve finally made up your mind to apply for a loan modification to help save your home. However, this process can be quite complicated, so getting organized is important to make sure you are doing things right.

When organizing what you need to present to your attorney or lender, think documents. Documents are the essential tool that they’ll use to assess your qualifications, and your chances of getting that approval will depend on how well you present them.

Most of these documents are commonly asked by lenders during the initial stages of negotiation. Use this list to help you get started.

o A Hardship letter. This is a short letter giving a detailed description of the situation you are in and the reasons why you can’t pay your current loan.

o A copy of your federal income tax returns for the past two years

o A copy of your W-2 forms for the past two years.

o A Copy of your bank statements for the past two months (The lender is less likely to grant you a loan modification based on hardship if you have a lot of money in the bank)

o A copy of your pay stubs showing your income from your job for the past two months.

o A copy of your most recent mortgage statement.

o A copy of your most recent property tax statement (if escrow payments for property taxes are not given on your mortgage statement).

o Valid copies of documents that support your hardship claims, such as a pink slip from your work, divorce papers, hospital bills, death certificate, etc.

o Borrower information sheet / Financial Worksheet that shows your income and assets. This is also similar to the Uniform Residential Loan Application – 1003 when you apply for a loan.

o A proof of homeowners’ insurance (if escrow payments for homeowner’s insurance are not shown on your mortgage statement). Ask your insurance agent about it.

o Your current financial statement / financial worksheet that specifies your monthly income and expenses. It also shows how much you are coming up short each month with the current house payment.

o Projected financial statement detailing any modifications to your monthly income and expenses and the payment amount you will be able to afford if you are approved.

o A copy of letters from credit counselors that demonstrate your commitment to straighten up your finances and the steps you are taking to achieve that goal.

o A cover letter or form explaining why you’re submitting all these documents and giving a list of all the documents included in the package. Also make sure the cover letter includes your name and account number.

Also, make sure you have signed all documents that require signatures before you submit your application. Your spouse may also be required, 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.

Remember that you only have one chance to get that approval, so make sure that you follow instructions carefully and include the specific documents that your lender requires you to submit. This process might not be easy, but it will assure you a better chance of getting your loan modification.