If you are unable to make your current monthly mortgage payments, you may be eligible for a loan modification. The Obama administration introduced the Making Home Affordable program, which gives a homeowner the opportunity to revise the terms of his mortgage and avoid foreclosure. You may qualify for a loan modification if you have gone through a divorce, lost your job, suffered an injury or illness, entered military service or incurred another type of temporary financial hardship. Even if you do not qualify under this program, your lender may be willing to work with you instead of dealing with the hassle of foreclosing on your home.
Ask your lender for the paperwork to apply for a loan modification. The process is similar for most financial institutions, but each company will have its own specific paperwork to fill out.
Obtain the appropriate Form 4506T from the Internal Revenue Service. This form authorizes the IRS to release a copy of your most recent tax return to your lender. If you filed your taxes with a Form 1040, you must use a Form 4506T-EZ. If you used any other type of form or did not file a tax return in the previous year, use Form 4506T to release information to your lender.
Complete the proof of income checklist included in your lender's paperwork package. The lender will require verification of your income to determine the mortgage payments you can afford each month. Make copies of any required supporting documents, such as your W-2s, 1099s, pay stubs or bank statements.
Fill out the Dodd-Frank form, which certifies that you have not been convicted of a crime involving a fraudulent real estate or mortgage transaction in the previous 10 years. This form is required under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Sign all documents in the appropriate places. Contact a notary public if any signatures require notarization. Make copies of the entire package and mail the originals to your lender.
Items you will need
- Loan modification paperwork
- Verification of income
- IRS Form 4506T
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