LOAN MODIFICATION?
 
If you are currently behind your mortgage payments due to hardship economic reasons, you may need to go for a Loan Modification. There are two ways to apply for your loan modification:

1) Do-it yourself - Call your lenders:
    a. Explain your financial hardship situation, and ask them what you need to do to get help.
    b. Be patient with the lender officers, they will do their best to help you.
    c. The procedure could take months due to thousands of similar cases that they have to handle.
    d. In additions, they have to have approvals from their investors.
    e. You’ll need to negotiate with them to get the best terms available.
    f. You have to keep checking with them for the latest status until all terms are written out.
    g. If you don’t think you can follow up with the items above, or you are discouraged by dealing with your lenders, then you may need help from an experienced Loan Modification agent.

2) Locate a Loan Modification Specialist:
    a. In California, it is illegal for anyone except attorneys to take a fee before they provide the assistance. (California’s Mortgage Foreclosure Act as codified in Sections 2945 et seq. of the Civil Code). By law, real estate broker who does loan modification for client cannot charge upfront fee without getting approval from Department of Real Estate (DRE) first.  If you are asked for an advanced fee, ask the agent to show you evidence of "no objection" letter.
    b. Ask how many cases have the agent succeeded in helping his/her clients. Ask for proofs.
    c. Ask the agent what his/her fee per case would be after the negotiation has been successful and complete. If you agree to the fee, then work with the agent.
    d. Explain your financial hardship situation. Up to this point, the agent should be able to explain what he/she needs from you in order for him/her to proceed the LM (very much the same process that the lender officers will do).
    e. With your authorization released, the agent will have the authority represent you to negotiate with the lenders. The steps the agent needs to do are very much similar to solution 1 (a, b, c, e, and f).
 
Under the latest government’s program to help homeowners with financial hardship, you can access to these links to see if you are qualified for a Loan Modification or Re-finance:

1. http://www.makinghomeaffordable.gov/modification_eligibility.html
2. http://www.makinghomeaffordable.gov/refinance_eligibility.html

 
If you cannot meet the two pre-qualifying tests above, you may need to consider other alternatives such as short sale, deed in lieu, or foreclosure.
If your income after subtracting from all expenses and debts is still not enough to qualify for the LM program, you may have to consider short sale, deed in lieu, or foreclosure as other alternatives.