Last month the U.S. Department of Housing and Urban Development (HUD) announced that it is awarding $42 million in housing counseling grants to groups across the country, including $890,000 to agencies in Illinois. An article in The Chicago Tribune reports that Open Communities, an advocacy group that provides fair and affordable housing counseling services in Chicago, is one of the organizations that is receiving a grant from HUD. Approximately 150 people come to Open Communities each year seeking mortgage counseling, and roughly 30 percent of those people work with the organization for months in order to obtain different types of debt relief such as loan modifications.

Loan Modifications

What are loan modifications? A loan modification, sometimes referred to as a mortgage modification, is a workout plan that a homeowner and their lender enter into in order to change the terms of the homeowner’s mortgage so that payments under the loan are more manageable. Some lenders will only grant a loan modification if the homeowner is experiencing a major financial hardship that will likely lead to a foreclosure. This is because lenders would much rather continue receiving monthly payments from their customers rather than go through the lengthy foreclosure process. With that said, a lender will only accept a mortgage restructuring if the terms are appealing to them. Therefore, if you are interested in obtaining a loan modification be sure to consult with an experienced loan modification attorney who can advise you on your legal rights and negotiate with the lender on your behalf.

Tips for Obtaining a Loan Modification

While consulting with an experienced loan modification attorney is the best advice that we can give you, Bankrate.com provides a very helpful list of tips for obtaining a loan modification. These tips include:

  • – Make Sure to Provide Every Document that the Lender Requests: When applying for a loan modification, homeowners are usually asked for a list of documents including paycheck stubs, a hardship letter, and a budget. It is very important to make sure that you submit every document that the lender asks for. Additionally, it is a great idea to put your name and loan number on each document in case a paper accidentally gets misplaced.
  • – Release Your Tax Return: Homeowners applying for a loan modification are almost always required to grant their loan servicer access to their federal tax returns by signing IRS Form 4506-T. Signing and submitting this form is very important so don’t forget!
  • – Be Persistent: You may be asked to repeatedly re-submit documents and while you may find this extremely frustrating hang in there, be persistent, and try your best to comply with all requests.

Need Legal Advice?

If you live in Chicago and are unable to keep up with your mortgage payments, applying for a loan modification may be a good option for you. The experienced loan modification attorneys at the Bentz Holguin Law Firm, LLC would be happy to sit down with you during a free consultation to discuss your legal options. Our office in Chicago can be reached at (312) 881-5112.