Thursday, January 2, 2014

Tales of a Paralegal: The Loan Modification Paperwork Monster

Author: Rita Paolella, Paralegal

You've missed several mortgage payments and the letters and phone calls start coming in. Now what do you do? If you want to keep the home you need to ask your mortgage servicer for a modification. What is a loan modification? It is the request to a servicer to modify your current loan to a set of new terms that allow you to catch up on your missed payments. Sometimes the loan modification may involve principal forgiveness, sometimes it will extend the loan term, sometimes it may reduce your interest rate, and sometimes it may do all of these or any combination thereof.

When you apply for a loan modification, your servicer will ask you for all kinds of paperwork that may seem overwhelming. They will ask for bank statements, paystubs, profit & loss statements for business owners, proof of insurance, utility bills, letters of hardship, tax returns, RMA, 4506-Ts, and so on. It seems like a mountain of paperwork and often times it is. Once you submit this paperwork you may be asked to resubmit it again and again if the paperwork ages during a review. You may even be rejected for a loan modification and have to reapply. You may even have to start all over if your loan is transferred to a new servicer. How do you deal with this paperwork monster?

As a paralegal at The Rogers Law Group, I work with many people trying to get a loan modification while they are defending against foreclosure or trying to prevent foreclosure. Hiring an attorney does not necessarily mean you will win or achieve your goal. It means you are hiring someone to "do battle" for you. Most of my day is spent battling the paperwork monster. The paperwork requests by mortgage servicer's can be annoying and cumbersome, but you have to do it. You have to work with your mortgage servicer and comply with their requests. It's like playing a game of tennis. The ball is in your court and you have to hit it or lose it.

My tips for fighting the paperwork monster: 
  1. When you are asked for paperwork and documents, you must provide them in a timely fashion. Servicers will deny your loan modification request if you miss deadlines.
  2. Don't make enemies with your point of contact at the bank (or at your attorney's office!). Being combative and non-compliant will not help you. It won't change what is required and you may need your contact to help you in the future.
  3. Keep good records. Know who you spoke to and when. Keep fax confirmations and copies of what has already been submitted and when. And don't toss your future paystubs and bank statements because more than likely, the mortgage servicer is going to want updated copies!

This will help the process go smoother and will help your attorneys if/when they need documentation evidence for court. The paperwork monster must be dealt with whether we like it or not, because the ball is in your court.

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