- 1). Prepare a case that you can no longer afford your monthly mortgage loan payment. Do this by making copies of your most recent paychecks, current federal income tax return, credit card bills, other loan statements and savings and checkings account statements. Your lenders will use these to determine if your financial situation is severe enough to warrant a loan modification.
- 2). Call your mortgage lender or bank and explain that you've suffered a financial hardship that is making it impossible for you to pay your mortgage loan payments each month. Explain briefly what this hardship is: a job loss, drop in annual income, reduction in working hours, or serious illness or injury.
- 3). Write a hardship letter that puts these reasons into print. Your lender may or may not request one of these letters, but it's always best to write one just in case.
- 4). Send your hardship letter and the copies of your financial statements to your lender. Your lender will then study these papers to determine if your financial situation has made it impossible for you to pay your monthly loan payments. To help you avoid either foreclosure or bankruptcy, your lender might be willing to modify your loan.
- 5). Agree on a loan modification that makes sense for you. Your lender might reduce the amount of money you owe on your mortgage, or it might lower your interest rate, both of which will drop your monthly payment. Your lender might lengthen the terms of your loan so that your monthly payment drops. But whatever solution your lender proposes, make sure that it results in a monthly payment that is low enough to help you avoid foreclosure or bankruptcy.
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