Home » Home Mortgage Help: Loan Mod, Short Sale, and Foreclosure Defense

Home Mortgage Help: Loan Mod, Short Sale, and Foreclosure Defense

Home Mortgage Help

The Real Estate Settlement Procedures Act is one great tool for home mortgage help and to avoid foreclosure. Click here for a free, no obligation RESPA case review from a consumer attorney.

Loan Modification Process

A loan modification is a change to the loan terms that is agreed to by and between the lender and the homeowner. The lender will modify the existing loan in order to work with the homeowner because of a hardship. The purpose is to help make the loan more affordable. Usually loan modifications are in the form of a rate reduction and/or fixing the rate for a certain period of time and/or even lowering your principal balance in extreme cases. Loan modifications are for borrowers that are delinquent or struggling to make their mortgage payments and suffered a hardship such as a job loss, divorce, or illness. Borrowers can even obtain modifications from their lender to convert to a fixed rate loan from an adjustable rate mortgage.

The earlier the homeowner addresses the issue, the better the chances are of negotiating a lower fixed rate and a payment that is manageable. If the household can afford the home, but not their current mortgage, then they may be eligible for a loan modification. A key factor that is required in every loan modification submission is the existence of some type of a hardship. The hardship can be temporary in nature or permanent, but the borrower must be able to prove the hardship.

The following are a sample of hardships that may get a loan modification request approved:

  • Adjustable rate mortgage has re-set (causing an increase in the monthly payments)
  • Illness to yourself or family member
  • Loss or reduction of income
  • Loss of job, changing of jobs
  • Damage to the property
  • Unable to sell the property
  • Failed business
  • Job relocation
  • Death of a spouse or a family member
  • Incarceration
  • Divorce or separation


Consult with a professional to see if loan modification is your best option.


You will probably need the following documents:

  • Hardship Letter
  • Most Recent Mortgage Statement
  • Last 4 Bank Statements
  • W2 Forms (Last 2 years)
  • Tax Returns (Last 2 years)
  • Income and Expense Financial Statement


Submit your financial packet to your bank to start negotiations.


If your modification request is approved, all final modification documents (a new agreement) will be sent to you to get your approval. Remember, this will not happen overnight, however, in most cases it takes at least 60 days to complete the process.

Short Sale

A short sale occurs when the proceeds of a debtor’s real estate sale fall short of the balance owed on the property’s mortgage. Usually this happens when the debtor can no longer pay the mortgage loan on the property and the creditor decides to sell the property at a moderate loss, rather than pressing the debtor and risking bankruptcy or foreclosure. An advantage to the short sale process is that it is typically faster than a foreclosure and avoids the steep bank loans. The debtor usually remains obligated to pay the deficiency, or the remaining balance of the loan, unless settlement is clearly stated on the acceptance of offer.

Because short sales are a form of debt settlement, they have a negative impact on a debtor’s credit report. Like all other entries except bankruptcy, short sales can remain on a credit report for the duration of seven years. It is possible to obtain another mortgage within one to three years after a short sale, depending on the debtor’s other credit information.

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