What Are Mortgage Modification Rules?

What Are Mortgage Modification Rules?

When a borrower falls behind with his mortgage payments to the lender, he or she may opt to apply for mortgage modification. In a nutshell, mortgage modification is a name given to a collection of relaxations that lender bestows upon the borrower considering the circumstances which are keeping the borrower from making the payments. But, not all borrowers can apply for mortgage modification; there are certain predetermined mortgage modification rules that are to be followed. Listed below are some of the rules:

Verification Of Borrowers Identity

This is the first basic security step in which the borrower is asked to verify his/her identity by presenting social security number, driver’s license or birth certificate and other documents of such nature that will assist in authenticating individual identity.

Always Apply For Primary Residence

Mortgage modification is always granted for your current and primary place of residence. An applicant has to be mindful as to not apply for mortgage modification for place of business, summer home or any other place. It has to be for the house, apartment or any other form of dwelling where the applicant resides in permanently.

Never Hide Any Financial Information

Some borrowers think they can make a difference by covering up certain details and aspects of their financial statement that would make their current state of things look deplorable. Nothing could be further from the truth and inadvisable. The lender will have all the financial information at its disposal under any circumstances so the borrower should be honest and help his or her case along. All the information provided to the lender should be complete and unaltered.

How Much Burden Will The Loan Payment Put On Your Income

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Guidelines for the newly negotiated loan modification clearly state that at least 30% of your gross income should be allocated for loan repayment. There might also be other surcharges that are to be taken into consideration. The amount and extent of information you have to divulge to the lender varies from one lender to another.

Hardship Letter

Last but by no means least, this last requirement for a mortgage modification is perhaps the most important part of acquiring a mortgage modification. Hardship letter is a detailed document that makes it evident to the lender that borrower is facing circumstances which are financially exhaustive and a mortgage modification is imperative. Absence of hardship letter would mean outright refusal of mortgage modification and hence the document should be compelling, well made and comprehensive; seeking professional help while preparing hardship letter is strongly recommended.
Obama’s Loan Modification Plan (HAMP) Home Owner Affordability And Stability Plan

Considering the present economic crisis that has hit the country, present government to aid the homeowners has announced an all-inclusive package worth $75 billion. If anyone wishes to be a recipient of this bailout program, certain predetermined criteria are to be met which are described below:

The current mortgage amount must be less than $729,750 and the mortgage must have been sanctioned before January 1, 2009. The mortgage repayment is equal to more than 31% of home owner’s gross income.

By: Muhammad Suhail

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