Diaz & Associates

Helpful Loan Modification Tips for Homeowners

One of the most helpful Loan Modification Tip for New Jersey home owners, simply put, is "Avoid Scam Artists". There are plenty of unscrupulous firms victimizing distressed home owners. Asking for up-front fees can be a sign that you may be headed into trouble.

Are you a New Jersey resident and are late, or having trouble meeting your monthly mortgage payments? A Loan Modification May be the solution you're seeking. A Loan or Mortgage Modification is essentially a reformation of your mortgage agreement in which certain conditions are changed. Such changes, or modifications, could be a cut in the interest rate charged, or perhaps an extension of the loan's length. Both of which will decrease the amount of money you will have to pay each month. In to-day's mortgage market, extending your mortgage from 20 to 30 years will save you 15 to 20 percent. Combining this extension with a 2.5 percent reduction in interest rate equates to a 30 to 40 percent reduction in your monthly payment. In some cases the modified agreement could even include a reduction in the total amount due. This would have an even greater positive impact on your payment schedule.

Early efforts involving loan modifications were very often insufficient in that they only provided fleeting relief for the distressed home owner. Soon home owners were back in the same terrible predicament of not being able to keep up with their payments. This is the primary reason our government has developed and implemented the Making Home Affordable Program (MHAP). This program has been extended; the new deadline for filing is December 31, 2113. If you need a New Jersey Loan Modification, there are a number of issues you should be made aware of. We have included 10 valuable tips which will help you cope with your situation and give you guidance, as you attempt to save your home.


Tip Number 1

DON'T PROCRASTENATE - GET STARTED NOW! – When this housing market crisis first started, Loan Modifications only applied to those homes which already had started the foreclosure process. This has been changed. Starting early increases your chances of being successful. You do not have to be in default to apply for MHAP. Going directly to your mortgage lender can be a bit dicey. It can come down to luck. A lot depends on who your lender is and who they assign as your negotiator. Remember, the government program does not mandate that you be in default, so get started now.

The Government's MHAP web site has a Payment Reduction Estimator that could help you see what your mortgage debt-to-income is, and if you may qualify, and the what the extent of your possible reduction in your monthly payment might be.


Tip Number 2

DO YOU NEED PROFESSIONAL HELP? – Questions you should ask yourself include. Can I go it alone? Should you retain an Attorney? Should I go to a of a Loan Modification firm or a nonprofit housing group?

Doing it by yourself requires that you have the expertise and time necessary to prepare the required paperwork as well as have the negotiation skills to confront the lender's trained and experienced negotiator. These are loan modification skills and experience that few private citizens have.

Home owners also can take advantage of HUD approved counseling agencies that have the prerequisite experience and do not charge for their services. Whatever you do, don't pay any requested upfront fees or give confidential data, like bank account information, to any party that is not a law firm or other trusted firm. Any such requests for up-front monies could be a signed they may be trying to scam you.

Hiring Attorney, who is knowledgeable of the many loan modifications issues, has many advantages. One who can negotiate on your behalf and obtain the best possible terms, is money well spent. Nominal Attorney fees expended for negotiations can be recovered numerous times over the length of your mortgage.


Tip Number 3

FIND OUT WHO YOUR ACTUAL LENDER IS – Who you originally obtained your mortgage from may not be your present lender. Loans can be sold off or combined with other loans and held by a group of Individuals as a mortgage back security. It is a lot easier to obtain a modification if it is held by one identity, since they are the single source of approval. In order to qualify, you must know who holds your mortgage. You can start by contacting your mortgage servicer and simply asking who owns your loan. Your loan servicer's telephone along with its name can be found on your payment coupons or on your mortgage statements. Another resource for this information is Fannie Mae and Freddie Mac. They maintain web sites were you can type in your home's address and they will tell you if either one holds your mortgage.

Participation in the MHA program is voluntary; however the Federal Government is providing financial incentives for those lenders who join. Many of the major lenders are participating in the program. The government's web site maintains a list of participating servicers.


Tip Number 4

ALWAYS BE HONEST– The Loan Modification application will require a significant amount of financial data. Providing exactly what the lender needs and in the proper format will make the procedure go smoothly. Above all, insure that the supplied information is both accurate and truthful. Do not be tempted to exaggerate any of your financial data as any untruths can damage your chances of success.

Prior to contacting your loan servicer, the following information must be collected:

  • Your Monthly Mortgage statement
  • If applicable, paper work on any 2nd mortgages on your home
  • Two most recent pay stubs. This also applies to any other household member(s) who help with paying the mortgage
  • Federal Tax Returns for the last two years
  • If self-employed, the latest quarterly or if not available the year-to-date profit and loss statement
  • Paper work on any other income sources such as alimony, child support, social security, rental income, annuities, pensions, etc.
  • The two of your recent bank statements (savings, checking etc.)
  • A utility bill showing your name and property address
  • Unemployment insurance letter, if applicable
  • Credit card(s) balances along with the minimum payments due on each account
  • Information on all your other assets like stocks, bonds, other property owned , etc.
  • It is extremely important to prepare an excellent hardship letter describing any circumstances that caused your income to be reduced or expenses to increase (job loss, reduction in hours or rate of pay, divorce, illness, etc.)


Tip Number 5

AN EXCELLENT HARDSHIP LETTER IS CRUTIAL – As stated in Tip No. 4, documentation as to how you got into this quandary can be very useful. It's critical that it be composed in a factual manner and be easy to read and follow. Your loan servicer must be clear on why and how you have gotten into this situation. It is important that your letter be correct from a time standpoint. This will enable your lender to follow the chain of events which has affected your inability to make your payments. Make it easy for any reader to follow what has happened. Always make your hardship letter to the point; your servicer will not appreciate a rambling letter.

Tip Number 6

CONTACT THE PROPER PERSONNEL – Homeowners, going it alone, often find the most exasperating part was finding out and talking to the right people. You must find the right section within that institution and then search for the person who has the authority to act as the representative of the lender.

Tip Number 7

ARE YOU GETTING THE BEST POSSIBLE TERMS, AND CAN YOU AFFORD YOUR NEW PAYMENT SCHEDULE? – Upon presenting your case to your lender, you normally will have very little influence over the outcome. It's the representative's job is to extract the most money out of you, while still maintaining you as a customer. Being offered a deal that you still cannot afford doesn't make any sense. So don't accept it out of desperation. If you do, you could be back in the same financial dilemma in just a few months. The representative usually has a bit of latitude in the negotiations, so you must persuade him/her that you cannot afford the offered modification. It is critical that you demonstrate to them that your detailed budget proves that you will still not be able to make the payments.

Fortunately for you, foreclosure is expensive for lenders. This gives you a slight advantage during your negotiations. In order to get the best possible terms, you or your attorney must convince the lender that the offered deal will not work. Banks and lenders talk and evaluate financial situations on a daily basis. You or your attorney must know how to convince them in the language they understand.


Tip Number 8

NEVER LOSE YOUR COOL - BE CALM–Dealing with lending institutions can be very annoying and it is easy to become upset. Don't yield to this temptation. Regardless of the reasons, you losing your composure and conducting yourself poorly often leads to further obstructions. No matter how difficult and uncooperative a person gets, your poor behavior can only make things worse. Treat them as nice and friendly as you would like them to treat you and hopefully they will be nicer and more cooperative.


Tip Number 9

DOCUMENT EVERYTHING-BE ORGANIZED! – Having a record of all your actions in your path to a loan modification is important. You should document everything. This includes all telephone conversations. Include the names, titles, telephone numbers, and a brief summary of your conversations and any replies you received. If you have to deliver any written documentation, use either certified mail or a deliver servicers like Fed Ex or UPS. This will ensure that your documents were delivered on time and that they were actually received. Make sure to keep a copy of everything you send. Keep it well organized, so that your attorney or loan modification firm can easily understand the chain of events that occurred before they became involved in your case.


Tip Number 10

PATIENCE, PATIENCE, PATIENCE! – You have to be both patient and proactive simultaneously. Modifications can take several months. If you are doing it by yourself, obtain a proposed time schedule from your lender at the very beginning. Monitor the schedule for key events and call if a key event is approaching and you have not heard from them. If you hire an attorney, he/she will keep tract of the schedule to ensure your loan modification is processed in a timely manner.

NOTE WELL- Do you feel that your lender is dragging their feet or giving you the proverbial "runaround"? Don't hesitate to "CC" your senator or congressman on your correspondence. They will probably not intervene on your behalf, but it still could have a positive effect on the manner in which your bank deals with you in the future. You should not do this initially, but you can use this tactic if you are getting resistance from your lender.



Diaz & Associates P. A.
309 Fellowship Road
Suite 200
Mt. Laurel, NJ 08054
Call Toll Free:
(877) 404-6487







We also have a Miami Loan Modification Attorney for our South Florida residents and a New York Loan Modification Attorney for our New York City clients.