Mortgage Loan Modification – Do It Yourself – DIY

If you organize all of the required paperwork and submit a complete package you can do your own mortgage loan modification.

The first step is to fill out your financial worksheet and monthly budget. You will also need to calculate your monthly income. Next you will use this information to pre-qualify yourself using the FDIC’s NPV (net present value) worksheet. You can download the worksheet at fdic.gov/consumers/loans/loanmod/NPV.xls . Fill in just the basic sections about your current loan terms and your income. The NPV worksheet will calculate your recommended modified terms. If you cannot figure out the spreadsheet then just use 31% to 38% of your gross monthly income before taxes and deductions to figure your new modified payment.

Now that you have an idea of what terms you will qualify for you can move on to preparing a hardship letter and cover sheet for your loan modification package. The hardship letter should briefly tell the lender why you cannot afford the present monthly payment and what you could afford to pay.

You will need an appraisal or Broker’s Price Opinion based on a quick sale value with three months marketing time. You can order this from a local appraiser or Real Estate Broker that knows your area.

Next you will want to prepare a coversheet that will make your case for a mortgage loan modification to your lender. The coversheet should include the current estimated value and your payoff balance. You should bold type any deficiency if you owe more than your house is worth. The requested new rate and term and a list of documents that you are including in the loan modification package. This is also a good place to summarize your market selling conditions and any shortcomings with your property.

Finally you will assemble your mortgage loan modification package and send it via certified mail to your lender’s loss mitigation department if you are behind. Otherwise send it to the correspondence address if you are current on payments but expect to fall behind within the next six months.

It is very important that you submit a complete loan modification package all at the same time. Do not send in part now and more later, even if that is how your lender asks for it.

If you do not qualify for a mortgage loan modification and are over financed on you home look into the Home Affordable Refinance Program. It does not offer the dramatic savings of a loan modification but could drop your rate a couple of points.

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