When you simply cannot afford your mortgage payments anymore, you need to ask your lender for a loan workout. There are three main loan workout solutions. The first is a forbearance agreement. A forbearance agreement is when your lender puts all your interest and fees on the back end of your loan. For most homeowners this is not the ideal solution.

Loan modifications and short sales are the most common solutions today. Homeowners who are requesting a loan modification or short sale need to gather all the required mortgage documents before applying. Below is a list of the required loan modification documents most banks will request from you.

Hardship Letter

• Provide a letter detailing the events which have made it difficult for you to make your payments. Visit our How to Write a Hardship Letter article for more information.
• Provide a photo ID, copy of social security card.

Employment / Income Verification

Provide 2 month’s worth of pay stubs

• >>>If paid weekly: 8 pay stubs
• >>>If paid biweekly: 4 pay stubs
• >>>If paid monthly: 2 pay stubs
• Provide the last 2 years of Tax Returns. You need to include all W-2’s & pages.
• If your self employed, you must provide an income statement showing your past 2 months of income along with a copy of last year’s IRS filing.
• Child Support, Alimony or Retirement documents to prove or show income (if applicable).

Assets

• Provided the last 2 bank statements. Including checking/savings and all others.
• Provide the latest statement of your 401K, IRA, Profit Sharing or any other retirement account (if applicable).
• Provide the latest statements of any Investment accounts such as Mutual Funds, Stocks, Bonds, etc.

Mortgage Documentation

• Provide your last Mortgage Statement. (1st and 2nd Mortgage) Any letters or notices sent by the lender(s).
• Taxes and Insurance Statements.( if not included in your mortgage payment).

Utilities

• Provide the last statement or bills for the following:
• Gas bill
• Electric bill
• Water bill
• Phone / cell phone bill
• Additional Town services, such as garbage pickup.
• Home insurance Policy
• Home owners Association bill / dues

The approval process for loan modifications can vary greatly from bank to bank and even from homeowner to homeowner.  You will soon learn that patience is a virtue during the loan modification process. It's important to document every phone conversation you have with your lender. Record the date, who you spoke with, for how long, what department, and any important notes regarding your conversation. Visit our loan modification bank phone numbers page for a complete list bank contact information. If you are calling your lender for the first time, our article on contacting bank's loss mitigation departments, may be beneficial to you.

Being fully prepared is very important to the success of your loan modification.  Typically homeowners who submit all the required information the first time, get approved faster. Currently your debt to income ratio is a very important factor in getting a loan modification approved. If your debt to income ratio is not inline with your banks loan modification requirement, it is important to speak to a Professional before applying for a loan modification. You can get free loan modification advice from the counselors at HOPE NOW by calling 888-995-HOPE

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