In desperate need of a loan modification to save their home and avoid foreclosure, they are stuck in a sea of paperwork, bureaucracy, and uncertainty that seems like it will never end.
Borrowers who want a loan modification are required to submit an application to their loan servicer, called a request for mortgage assistance (RMA), that includes many financial documents.
Servicers can have different requirements, but some of the common documents you will likely be required to submit with an RMA include:
If you are a W-2 employee:
If you are self-employed:
It's a lot of work to gather all of those documents, then scan or fax them to the loan servicer. Often homeowners don't submit a complete package. Their application is missing some documents, so it's not accepted as complete and reviewed.
Banks are not supposed to move forward with foreclosure while a loan modification is under review. That's called dual-tracking, but if the application is never accepted, it's not dual-tracking.
Once the RMA is complete the best case scenario would be that it's promptly accepted, reviewed, and you are offered a great loan modification with an affordable monthly payment and reduced principal.
That would be great, but more often than not, the borrower's work is not done after their application is accepted. They have to keep sending documents they've ALREADY FREAKIN SUBMITTED!
There is one big reason that you have to resubmit documents: they are not the most recent versions of those documents available.
After doing all the work of applying, having to resubmit documents is often a cause of frustration, which turns to panic, especially if a sale date is approaching.
Foreclosure sales are supposed to be canceled when a complete loan modification application is accepted for review at least 37 days before a sale. So getting the application accepted before that time is vitally important.
You have to be proactive about getting a loan modification and saving your home from foreclosure. The person at your loan servicing company might have a few hundred loan mod applications that they're working on, and they are known to give applicants the runaround. Don't just hope that they will prioritize your case and keep you up to date on all the developments. Call them regularly to see what's going on and to remind them what you want.
And consider hiring a professional, such as a foreclosure defense attorney, to defend you from foreclosure and help you get a loan modification. Our firm shoulders the burden of following up wtih lenders and making sure documents are up-to-date so that our clients don't have to.
There's a lot to know about foreclosures and loan modifications. What you don't know can hurt you. Someone with experience may be able to help you increase your odds of getting what you want or get a better deal than you could have gotten on your own.
Image courtesy of Sira Anamwong at FreeDigitalPhotos.net