Below is a list of documents which are required by lenders when preparing your loan modification packet for submission;
A Lender specific application form
2 most recent pay stubs for each borrower
2 most recent bank statements
Other income verification such as unemployment (unemployment stub and award letter), Social Security (social security stubs and award letter), Pension (award letter), child support, rental income (rental agreement Disability and if other income need explanation and verification)
Property tax statement and home insurance if borrower does not have an escrow account
W-2 (last 2 years) and 1040 tax return forms (first 7 pages)
4506-T form
If borrower filed bankruptcy an authorization form from bankruptcy attorney and bankruptcy discharge is needed
If Self Employed add:
3 most recent business bank statements
A profit and loss statement for 12 months period time
1040 tax returns (last 2 years - all pages)
1099 tax return form (last two years)
Financial Hardship Explanation
It is necessary for you to explain the reason, in details, of your financial hardship in the form of a hardship letter. There must be a written statement explaining why your mortgage is either in default or is going into default. This is required by all mortgage lenders in order for you to qualify for any type of a loan modification or other foreclosure prevention option. Without a valid hardship, expect that you will not be considered for a loan modification plan.
Acceptable hardship situations:
following divorce/separation
death in the family
illness/medical bills, military service
loss of job/income
increase in property tax
increase in adjustable interest rate
unavoidable home repairs
home value depreciation
short-term/permanent disability
Financial Worksheet
The lender will examine both your income and amount of debt to determine whether or not you will be able to meet any new monthly loan payments now as well as in the future.
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