We have all heard the joke about the person “in denial…and I’m not talking about the river in Africa”. While this is a play on words that makes people chuckle, anyone who is in denial is usually doing harm to themselves in some way or another.

This is true of anyone hesitating to deal with a mortgage crisis. Each month that a homeowner does not make their full payment makes their chances for remaining in that home more and more bleak. Luckily, the United States government has recently provided roughly $75 billion towards home loan modification programs. This means that a homeowner who is facing default, or even foreclosure, still has a good chance at saving their home. The thing is that they have to act fast.

Right now banks actually have waiting lists for clients seeking bank loan modifications, and they are simultaneously trying to prevent these same people from entering into foreclosure. The government funding has only made the entire process busier than ever, and this is the reason that the government is advocating for the use of bank loan modification companies and experts when possible.

The bank loan modification process is not really a “do it yourself” venture. It requires formal documents that will eventually lead to a loan proposal which is presented by the borrower (or their loan modification agent) to the lender.

A good loan proposal will contain the following items:

• Cover Letter – This will be a very concise introduction into the contents of the proposal and will offer a brief explanation as to why a modification is being requested. It should provide a summary of the anticipated outcomes, and include the calculations that demonstrate the changes in monthly payments, terms, etc.
• Proposal Worksheet–This only looks like a simple document, but in fact it may require an extensive amount of research and data collection. It will outline the financial changes in the loan being modified and will give details about any increases in the terms or changes in the interest rates. It will also demonstrate, honestly and accurately and usually with documentation, the amount of money the home would receive in a foreclosure auction, how much it could be rented for on a monthly basis and how much time would be required to complete the process. This paints a good picture of whether or not foreclosure would be favorable or unfavorable to the bank or lender.
• Income v. Expenses Worksheet
• Proof of Income – Usually the most recent three months of pay stubs
• Most recent three months of bank statements
• Previous Year’s Income taxes and 1040s or W-2s
• Hardship Letter
• Monthly Mortgage Statement

Obviously this is a lot of data and a lot of work, which all takes time. This is the reason that anyone who is facing financial trouble or hardship, and who fears they may fall behind in their payments should contact a loan modification company and the lender as soon as possible.

As always, thanks for reading this post and if you enjoyed it be sure to comment below. Also, check out our FREE 2009 Loan Modification Guide: Saving Your Home From Foreclosure.