Mortgage modification is a popular recourse for struggling homeowners looking for ways to save their homes. The Home Affordable Modification Program (HAMP), launched by the government in February 2009, has since helped thousands of borrowers steer clear of foreclosure and get back on their feet. The real estate crash hasn’t fully ended, but many experts are confident that mortgage loan modification will always offer a viable option.

Mortgage modifications defined

A home mortgage modification is an agreement between a bank and a borrower to change the terms of the mortgage so that the latter can more easily afford monthly payments. The change may be in the form of interest rate reductions, extension of loan terms, or a switch to more stable products (such as an adjustable-rate to a fixed-rate mortgage). Depending on what you agree on, a mortgage modification can save you anywhere from a couple of hundred to a few thousand dollars in payments every month.

Mortgage loan modification requirements

Each lender has its own standards for mortgage modifications, but the basic concept is that you should be in financial hardship and convince your lender that a home mortgage modification is the best solution. This usually means providing papers to demonstrate your financial situation.

Some of the documents you may need are:

• Bank statements, credit card bills, and other debt statements from the last two months
• Proof of income, such as paycheck stubs, also from the last two months
• Tax forms and W-2 forms from the last two years
• Your latest mortgage statements and property tax forms
• Any documents that can prove your hardship, such as medical bills or a job dismissal

Writing the hardship letter

The hardship letter is one of the most important elements in a mortgage modification kit. Here, you explain to your lender how you missed your payments and how a mortgage loan modification can help you. Mortgage modifications require a valid financial hardship that couldn’t have been prevented, such as illness or job loss. Overspending or poor investment decisions may not qualify you for a home mortgage modification.

Working with an agent

Experts strongly recommend working with mortgage modification agents or attorneys to ensure better results. An agent can help you better understand how mortgage loan modification works and plan out your application more efficiently. They can also negotiate with lenders on your behalf and give you alternatives in case your mortgage modification doesn’t work out.