One of the most common loan modification programs is the Making Home Affordable Program  (“HAMP”) Sometimes this is known as the Obama program.  There are many requirements for this program but the most important ones are:

You must live in the house.

Your mortgage must be less than $729,750.00.

You got the mortgage before January 1, 2009.

You are behind, or are in danger of falling behind, on your payments.

Your current mortgage payment is more than 31% of your current income.

In order to apply for a loan modification, you should contact your lender and ask for a loan modification package.  The loan modification process can be long and frustrating.  You may be asked to provide the same documents several times.  You may speak to a different person every time you call and they may not know anything about your particular situation. You may be lucky enough to deal with one person, and then call one day to find out they no longer work there. You will probably get the run around and feel like you are wasting your time.  This is probably not because your lender is trying to annoy you, but because they are swamped with requests for loan modifications.

In order to keep your case moving forward, you should write down the date and time of every call, the name of the person you spoke with, and the subject of the call. By keeping good records, you can eliminate a great deal of frustration.  Remember, the person on the other end of the phone is probably handling hundreds of cases.  So the more organized you are, the easier it is for them to help you. Sometimes, it can take a year or more to get your loan modified, so be prepared to be patient and persistent.

The loan modification package will generally consist of a financial statement, a hardship letter, and request for copies of your tax returns.  Your lender will ask you to fill these out and return them along with paystubs, bank statements and other proof of income.  They may ask you to update these from time to time as the process moves along.  If you are approved for a loan modification, you will enter a three month trial period to show that you can make the payments on the modified loan.  It is extremely important to make these payments on time or the permanent loan modification may be denied. If you do make the payments, your lender will send you some papers to sign and make the loan modification final.