1. Income: In order to qualify for a loan modification, the borrower needs to earn a minimum amount as his monthly income. He can’t earn too much or too little. If he earns too much income per month, then there arises no reason to modify his loan as it would have been affordable to him. If the borrower earns too little income, then he won’t be able to arrange the monthly mortgage payments despite modifying it. Thus a sufficient amount of income is needed to qualify for a loan modification.
2. Financial proof: There are a few loan servicers who ask for a financial proof upfront. Now the government requires all loan servicers to get a financial proof before applying for a home loan modification. The mortgage servicers are required to get financial proofs before granting any trial loan modifications to financially stressed debtors. Besides providing an income proof, the borrowers will also have to sign an IRS form that will authorize the lender to get a copy of the most recent income tax return.
3. Financial hardship proof: Another rule that you need to follow before you go for a loan modification application is that you need to provide the lender with a hardship proof. You are required to provide a hard proof to the lender telling him the reason of your financial hardship, why you’ve fallen behind on your monthly payments. Writing a financial hardship letter mentioning all such details will be the perfect way to fulfill this requirement.
Thus, if you’re keen on modifying your home loan, you need to take into account the above mentioned rules. There are some state specific laws too regarding a home loan modification. These laws actually dictate who can and who cannot handle such modifications. Be aware of such rules to take an informed decision while modifying your loan.
