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Tips For Getting A Loan Modification From Your Lender

28 August 2009 4 Comments

I now know personally 5 people that have gotten ridiculous modifications to their mortgages.  4 of them have gotten their rate dropped to 2% for the next 5 years, and then set at around 5% after that.  2 of the 4 of these also went from an interest only loan to P&I.  Amazingly, the other person I know had their loan modified to 2.25% for the entire term of their loan!  Unbelievable.  The cost?  Nothing.

My emotions have ranged from both very happy for my friends getting some relief (some needed it more than others), and also my frustration with our government programs as a whole.  While I do not blame any of my friends for taking advantage of such a program for one second (after all, their tax dollars are funding these programs), I find myself frustrated with my “high” rate of 4.75%!  Sad, huh?

So, while I figure out who my mortgage payment is going to since my lender just got raided by the Feds (Gotta love America in 2009), I am planning my strategy to convince my new lender why I should be approved for this program as well.  While, I don’t think that this program was really designed for me, money is very tight for me these days (we recently went from two incomes to one income), and “get mine” where I can?  Right?  I’m being taxes and will suffer the ill consequences (inflation) of the bailout culture that we have today, so why should I stand by and not get some “relief”?  Do you have any thoughts on this?

Tips for getting approved for a loan modification

  • Demonstrate that your mortgage payment is upwards around 40% of your gross income.
  • If you’ve had a drop in income due to loss of job or loss of bonus, make this very clear.
  • If you have children, make sure your lender is aware.
  • Mention your other fixed expenses such as utilities, insurance, medical costs, auto payments, etc. but do not over-state your expenses (somebody I know that applied for the program was denied and told to “get your expenses in order” before applying again).
  • If you get denied, try again.  It took one of my friends 3 times to get approved.  It seems that you might be at the mercy of the subjective judgement of whomever you get on the phone.

I believe the program is designed to help individuals get their mortgage payment down to around 30% of their gross income.

Despite my absolute outrage at the reckless spending and bailouts of our country, I don’t blame anyone for taking advantage of these programs.  After all, the middle class are the ones who will get killed by an inflationary environment or higher taxes to fund these programs.  My recommendation: get yours while you can.  God bless America.


  • philip said:

    Wow, I wish I could get my rate dropped to anything like that, even yours would be an improvement over my 5.875%.

    Unfortunatly I did not take out one that my mortgage is anywhere close to my 30% mark, no loss of bonus or job, just freeze of pay so no raises for a while. No kids, and not too many fixed expenses.

    Plus I am with a credit union for my loan so I can not take advantage of the gov’t programs.

    Still I know that if I had the opportunity or others then they should, even if it annoys me everytime I see someone get it.

  • Kevin said:


    I’m with you on that. I had 5.875% and just got it dropped to 4.75%. What’s funny is I should be excited about that, but then I see several people get their rate dropped to 2% for free when I had to pay $4000 in closing costs to get my 4.75% rate!

    “change you can believe in”!