Loan Modification Forms Explanation of How to Properly Fill by dbernstein


									Loan Modification Forms
 Explanation of How to Properly Fill Out Forms
 Loss Mitigation Fax Cover Sheet
 Example Cover Letter
 Loan Modification Proposal
 Real Estate Cash Flow Worksheet
 Dynamic Expense Worksheet
 Dynamic Income Worksheet with Disposable Income
 Example Hardship Letter
 Example List of Hardships

                                   Last Updated: September 5, 2008
                                     Explanation of How to Fill Out Forms

Form 1: Cover Letter
         Cover letters are not required but I find them to be important. Most of these loss mitigation departments are overwhelmed. If you
are organized and professional you are one step up. When negotiators/loss mitigation agents can navigate through your information quickly
it prevents frustration. Also, it shows that you are on your game and are ready to fight for the best modification.

Form 2: Loan Modification Proposal
         Your loan modification proposal is designed to present to your lender your request for certain loan modifications. It is also going to
include pertinent personal financial information and market conditions. Be prepared to document any claims made on the proposal. No
lenders require a proposal but all will look at it and consider the information on it.

Form 3: Schedule of Real Estate Worksheet
         Fill out the form as accurately as possible. These numbers will be reflected on the credit report so be exact. Your cash flow will
automatically populate the corresponding worksheet. If you are getting a negative total cash flow, it will appear on the expenses worksheet.
If you have a positive total cash flow, it will populate on the income worksheet.

Form 4: Monthly Expenses Worksheet
         Your monthly expenses should also be filled out accurately. Do not leave off an expense that is imperative to your daily life as it will
cause problems on either your modification or your ability to pay your mortgage after the modification. This list is pretty detailed. If you have
other expenses, specify. Not all lenders require the balanced owed so do not focus on that. Banks want to know what you pay out each
month vs. what you bring in.

Form 5: Monthly Income Worksheet and Total Disposable Income
         When filling out the monthly income worksheet remember that it is based on NET INCOME. This means after tax, take home
income. If you are self employed, use what you actually make per year minus taxes. Also, include tips and other non-documented income if
needed. It is highly unlikely that your bank will report you to the government.

         Rental income includes rooms or other units that you rent out in your house or on your property. If you do not have income in any
section, leave it blank. A person does not have to be on the loan/mortgage to use their income to qualify. As long as they live in the house
their income can be included; but so must their expenses. This includes older children who contribute.

         Monthly net income minus monthly expenses equals the monthly disposable income. This is the number that is used to determine
the mortgage payment and left over cash for incidentals. If this number is negative the homeowner will get declined for a modification. This
is where one must adjust the interest rate, amortization and principal balance to back in to this number.

Form 6: Hardship Letter
         Hardship letters are intended to show lenders why someone could not or cannot make their payment as scheduled. If your hardship
is permanent but you still have income, you might be a candidate for an aggressive loan modification. If your hardship is temporary, you
might be eligible for a less aggressive loan modification.
                                                       Fax Cover Sheet

To:                                                                      From:

Phone:                                                                   Pages:

Fax:                                                                     Date:

Regarding:                                                               CC:

         Urgent                For Review                Please Comment                       Please Reply            Please Recycle

Borrower:                                                                Co-Borrower:

 st                                                                       nd
1 Servicer/Lender:                          Loan#                        2     Servicer/Lender:                       Loan#

Property Address:                                                 City                                   State                   Zip


This message may contain confidential and/or privileged information. If you are not the addressee or authorized to receive this for the
addressee, you must not use, copy, disclose, or take any action based on this message or any information herein. If you received this
message in error, please advise the sender immediately by calling the number above and please shred this fax. Thank you for your
                                                    Cover Letter Example

Your Name
Property Address
Loan Number(s)


To Whom it May Concern;
(find out who will be receiving this, sending it to a department is acceptable as long as it is labeled correctly)

Attached you will find my proposal and supporting documentation for a loan modification regarding loan number ###########. After
analyzing my income and the current real estate market the following proposal seems fair to both parties involved. I am currently unable to
afford the mortgage payments how they are. However, I will be able to maintain the proposed payments consistently on-time for the
foreseeable future. I would prefer to stay in my home at these payments but if a modification is not possible I will be forced to foreclose.

New Principal Balance: $395,000
New Interest Rate: 5.5%
New Amortization Period: 30 years
New Payment: $2,242 excluding taxes and insurance

A further breakdown and analysis to follow.

Documents included, in order:
    -    Proposal Form
    -    Real Estate Cash Flow Worksheet
    -    Income vs. Expenses Worksheet
    -    Most Recent 3 months paystubs
    -    Last Year’s 1040s/w2s
    -    Most Recent 3 months Bank statements
    -    Hardship Letter
    -    Value Assessment
    -    Forensic Review including Violation code if applicable

Your Name Here
Signature as it appears on your loan documents
                                 Example Loan Modification Proposal

                                         (Obviously remove the commentary before submitting)

Request to Modify to the Under Following Terms:

Current Existing Balance:                                  $435,000
Current Fair Market/New Principal Balance:                 $395,000
(Have supporting documents)
Principal Balance Reduction:                               $ 40,000

Current Interest Rate:                                     9%
Requested Fixed Interest Rate:                             5.5%

Amortization Remaining:                                    28 years
Requested Amortization:                                    30 years

Previous Payment:                                          $3,500.00
New Payment:                                               $2,242.00

Disposable Income for Housing:                             $2,750.00
(As determined from the Income vs. Expense worksheet)

Disposable Income Post Modification:                       $ 508.00

Comparable Homes Foreclosure Auction Price:                $240,000
(Have supporting documents)

State Timeframe to Repossess Property:                     10 months from first late

Late Fees/ Penalties:                                      Forgiven/Waived

Late Balance:                                              Incl. in New Principal Balance

Market Rent for Similar House in Neighborhood:              $1,750 per month
(Should be accurate)

Requested Next Payment Date/ Forbearance:                   (Request 3 Months Away)
                                                     Real Estate Cash Flow Worksheet

    Borrower:                                                                        Co-Borrower:

     st                                                                                  nd
    1 Servicer/Lender:                                     Loan#                     2        Servicer/Lender:                               Loan#

    Property Address:                                                             City                                      State                       Zip

     Please complete schedule of real estate owned for all properties you own or show on your credit profile in table provided below as
     Servicer/Lender may request documentation pertaining to all properties.

Property Address                                                     Amount of                                     Total
                                                          Type of                            Gross                             Insurance       Rental
                   (enter S if Sold, PS if Pending Sale              Mortgage &                                  Mortgage                                     Rental Loss
                                                          Property                        Rental Income                       Taxes & Misc    Income
                  or R if Rental being held for income)                Liens                                     Payments

1                                                                                                                                               0                 0
2                                                                                                                                               0                 0
3                                                                                                                                               0                 0
4                                                                                                                                               0                 0
5                                                                                                                                               0                 0
6                                                                                                                                               0                 0
7                                                                                                                                               0                 0
8                                                                                                                                               0                 0
9                                                                                                                                               0                 0
10                                                                                                                                              0                 0
11                                                                                                                                              0                 0
12                                                                                                                                              0                 0
13                                                                                                                                              0                 0
14                                                                                                                                              0                 0
          Total                                                         0                        0                 0                0           0                 0

    Type of Property: SFR: Single Family Resident | PUD: Planned Unit Development | Condo: Condominium | Units | Commercial | Land
    Amount of Mortgage & Liens: Add your total existing mortgage balances or liens on property
    Gross Rental Income: Estimated property’s current market value
    Total Mortgage Payments: Your total current mortgage payments. This may include Taxes and Insurance
    Insurance Taxes & Miscellaneous: Leave blank if payments are included in your mortgage payment. You may add HOA fee to this field
    if applicable
    Rental Income: If Gross Rental Income is greater than Total Mortgage Expenses
    Rental Loss: If Gross Rental Income is less than Total Mortgage Expenses
                               Expense Worksheet

Monthly Expenses                 Monthly Payments   Creditor/Bank/Servicer

Property Taxes

Homeowner Insurance

H.O.A Fees

Other Mortgages                           0
Credit Cards/Unsecured Loans

Auto Loan

Auto Insurance

Child Care

Alimony/Child Support

Medical/DR. Expenses

Health Insurance

Life Insurance

Cell Phone

Other Phone






Transportation/Gas/Bus Fare



Other 1 (Specify)

Other 2 (Specify)

Other 3 (Specify)

Other 4 (Specify)

Other 5 (Specify)

TOTAL Household Expenses (A)
                                            Income Worksheet

Source of Monthly Income                      Borrower             Co-Borrower          Sub-total Income
(After Taxes/Net)

Net Monthly (1040s, W-2s)                                                                        0
Commission (1099)                                                                                0
Overtime                                                                                         0
Bonus                                                                                            0
Tips or Undocumented Income                                                                      0
Earned Interest/Notes                                                                            0
Rental (Rooms/Units on Property)                                                                 0
Social Security                                                                                  0
Pension/Retirement                                                                               0
Disability                                                                                       0
Child Support/Alimony                                                                            0
Unemployment                                                                                     0
Rental Property Income                                                                           0
Other 1 (Specify)                                                                                0
Other 2 (Specify)                                                                                0
TOTAL Household Income (B)                                                                       0

                                   Disposable Income Calculation

TOTAL Household Income (B)          -   TOTAL Household Expenses (A)   =   Disposable Income

                    0               -   $                              =   $
                                             Example List of Hardships

July 18, 2008


Borrower: Your First and Last Name
Subject Property: Any Street, Las Vegas, NV 89122
1 TD with Lender Loan # 38678763
2     TD with Lender Loan # 36787638

Dear Lender/Servicer:

(Handwritten is best)
I am writing this letter to explain my husbands and my unfortunate set of circumstances that have caused us to become delinquent on our
We have tried everything in our power to keep current on our mortgage payments but unfortunately we have fallen short and would like you
to consider working with us to reduce our payments

The main reasons that caused us to be late are the substantial Curtailment of both of our Income, Excessive Obligations and our Inability
to Refinance.

I work as a waitress and my husband works as a taxi driver. Our total household income is generated mainly from tips. It has decreased
dramatically due to the unfortunate economic situation. People are not coming to Vegas as much and for those who are they are not tipping
much. We both are full time employees and can’t get a part time job since we have a 3 year old son.

For the past several months we did pay our mortgage from our credit cards but now we don’t have sufficient money left on our credit cards to
afford our mortgage payments. We are trying to save up some money to hopefully work a payment plan with you after you reduce our rates
to something we can afford.

My husband and I consulted mortgage professionals regarding refinancing our home to lower our current payments but we were told that
there was not enough equity in our home to do so.

I have no others choice but to ask you to please consider my request of a loan modification. My family and I would really be grateful if you
can help us work a payment plan because my family and I do not want to lose our home. I want to keep making mortgage payments on time
and not have this nervous tension that is over my shoulder.

Sincerely and Respectfully,

Your Signature as you signed your loan documents at time of purchase or last refinance
                                              Example Hardship Letter

Example list of hardships that lenders consider during the loan workout process:

    -   Adjustable Rate Mortgage Reset- Payment Shock
    -   Death of Spouse of Co-borrower
    -   Damage to Property (natural disaster or unnatural)
    -   Divorce
    -   Failed Business
    -   Illness
    -   Job Relocation
    -   Loss of Job
    -   Incarceration
    -   Marital Separation
    -   Military Duty
    -   Medical Bills
    -   Reduced Income


These forms are intended to assist borrowers through the loan modification process. Loan Modification Made Simple, LLC does not
guarantee the approval of any loan modification.

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