Tips for Getting a Loan Modification


Paying the monthly mortgage bill can become difficult, depending on whatever financial situation arises. Lenders often provide the option to refinance a mortgage loan. Another option is loan modification. Rather than starting over with a new loan, this adjusts the original loan terms. Your lender can, therefore, help make the loan less of a burden.

If you’re considering a loan modification, these tips can maximize your chances of approval:

Gather Your Documents

The lender will require certain documents if you request a loan modification. These include bank statements, pay stubs, tax returns, your budget, and a hardship letter. The loan servicer might ask for other documents as well. Your only chances of approval are if you include every document and ensure it is not outdated. Labeling each document with your name and loan number is helpful as well, as lenders receive mounds of paperwork each day.

Release Your Tax Return

The loan servicer won’t have access to your federal tax returns unless you sign IRS Form 4506-T. Your tax return is the most substantive proof of income you have. It should be provided along with other income documents your lender needs.

Talk to Your Lender

When you contact your loan servicer, ask about what they need. The exact requirements may depend on your situation. For example, two paychecks may represent your monthly income, but whether you’re paid weekly, monthly, or bi-monthly can affect how many documents your lender requires. Transparency helps eliminate misunderstandings that can turn into problems when it comes to obtaining a loan modification.

Check on Your Status

Don’t let fear of rejection or pestering your lender get in the way. It’s okay to call the loan servicer once a week to inquire about whether the file is complete or if any other information is needed. Inform your lender of any change in circumstances; lenders actually prefer to hear from homeowners regularly, so they have as much up-to-date information as possible.

Don’t Be Discouraged

A request to resubmit documents doesn’t mean your loan modification is off the table. Repetition can be frustrating, but being persistent can ultimately lead to a reward. Loan servicers often have a specific process for handling things; sometimes papers and files do accidentally get lost.

Keep Your Options Open

There are many options when it comes to loan modifications. Try applying for the Home Affordable Modification Program with the federal government or something similar from your bank. Just checking if you qualify can open new doors. If you don’t qualify, be open to negotiating with your lender. They may offer more than one option for making your loan payments more manageable.

Some ways in which your home mortgage loan can be modified include:

  • Interest rate reductions
  • Extended loan terms
  • Partial deferment of the loan principle

When you reach a loan modification agreement with your lender, look at the specifics carefully. Make sure the terms provide a financial benefit before you sign on the dotted line. By doing the math carefully, you can determine exactly how much you’ll save each month.

Talk to a Loan Modification Attorney in Los Angeles

At OakTree Law, homeowners in Los Angeles and Orange County can turn to us for legal options and answers regarding loan modification. Financial hardship may be causing you stress, but our team can discuss available legal options and provide experienced counsel. We can help modify your loan in a way that’s most beneficial to you, starting with a free consultation. Request a free evaluation to learn more.