Practice Pointers: Create a Paper Trail When Applying for a Loan Modification

With foreclosures on the rise in Massachusetts, struggling homeowners will likely continue to apply for loan modifications in record numbers.  Loan modifications are a good option for mortgagors who have steady income and need help in obtaining an affordable mortgage loan payment.  However, despite federal and state laws created to promote loan modifications, the application process for loan modifications is, often times, anything but a breeze.

Too often, I hear from homeowners who have applied for modifications in good faith, and have been told by their loan servicers repeatedly that their applications have been lost and paperwork is missing.  Errors like these have been the subject of frequent litigation against banks and servicers.

In these unfortunate situations, a foreclosure defense attorney can help you fight a loan modification.  However, as I have often seen, a homeowner is in a much, much better position in fighting a modification if they have proof that they have been applying for a modification.  In other words, without documentation, it is only a homeowner’s word against the bank or loan servicer in claiming the loan modifications were not properly considered, which makes for a MUCH tougher case.

With this in mind, anyone applying for a loan modification should create a paper trail of their application process.  Hopefully this paper trial will never have to be used, but if a homeowner finds themselves having to go to a lawyer, this information will be a huge help in preparing your case.  Applicants for loan modifications should always do the following:

  • Make a copy of everything you submit to your bank or loan servicer.  An inexpensive scanner can be a huge help in organizing these files electronically.
  • Use some means of confirming that your bank or servicer received your application.  If you are mailing your application, send it by certified mail, which is proof that the recipient actually got what you sent them.  If you are sending it by fax, get a confirmation that your application was actually received.
  • Keep a log of all of your communications with your bank or servicer.  Note the date, time, who you were speaking with, and the status of your file.

Hopefully, your loan modification application will not end up in court.  But if you do find yourself in litigation, these steps will put you in a much, much stronger position in helping you get the relief you deserve.