There is a reason that so many homeowners complain about submitting and resubmitting applications for a loan modification. The banks will only review "complete" packets and a complete packet means that every single required piece of paper is submitted and filled out properly and according to each individual bank's specifications. Even the slightest mistake could cause the bank to label your application "incomplete" and you can go months thinking you are being reviewed for a loan modification only to discover that you end up in foreclosure, or if you did not defend the foreclosure because you trusted the bank you may end up with a default judgment against you. If you are in foreclosure that is a strong indication that the bank is not willing to work with you because the bank did not have to file for foreclosure if it was going to review you for a modification. An experienced foreclosure attorney can help you apply for a loan modification and negotiate with the bank's attorney for you.
Submitting documents at different times
Your best chance to obtain a loan modification is if you submit all the required information and supporting documentation at once. Different banks have different time schedules for how long they will keep a file open while waiting for the required documents. If you wait too long to submit what is requested the other documents you submitted might get "stale" and the bank will not review you for a loan modification unless you resubmit the documents previously sent in. In addition, if you send multiple documents at different times then there is a chance that your documents can be lost or misplaced which will lead to your packet being considered "incomplete".
Incorrectly dating the 4506-t form
When you've represented clients in foreclosure you get to hear the excuses for why a homeowner's application for a loan modification was not reviewed. The one form that almost no one fills out correctly is the 4506-t form which is a request for tax returns. This is a short one page form, but make sure to read it carefully. Most importantly, you will have to fill in the years for which you are requesting your tax returns. If you are requesting your 2012 taxes then the proper way to write that is 12/31/2012. Any deviation from that date format will likely cause your 4605-t form to be considered defective and you will not get a loan modification. You also need to sign your name at the bottom of the page and date it with the current date.
Not taking the hardship letter seriously
The hardship letter is your chance to convince the bank that you deserve a second chance and that your loan should be modified. When done correctly a hardship letter can be an asset towards helping a homeowner obtain a favorable loan modification. Mention the circumstances that led to you falling behind on your payments in the most compelling way possible. Tell a story that hopefully ends with some hint of an improved financial future. If you previously applied for a loan modification or spoke to someone on the phone and thought you were being helped you can mention those things, but don't be overly negative about the bank or the bank's attorneys. Try to keep it to one page.
Leaving something blank
Another huge mistake that homeowners make is that they do not answer every question on the application. Some banks scrutinize these applications and any question left unanswered, even if it is obvious that the question does not apply to that homeowner, may cause the application not to be reviewed. This is especially true if one of the financial questions is left blank. So if you are asked how much social security you receive and the answer is none then you should write 0 on the line. There may be some financial questions that homeowners don't want to answer because they may be receiving other sources of money, but by not answering the questions the homeowners are not tricking the bank, they are actually sabotaging themselves from being reviewed for a loan modification. As frustrating as it may seem sometimes, it is possible for homeowners to obtain a very good loan modification and you are on your way if you can avoid these 5 mistakes.
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