After suffering a financial hardship, you obtained a loan modification from your lender that lowered your interest rate and reduced your monthly payment amount. But now, the troubled economy has put you right back where you were before–falling behind on your loan payments and fearful of defaulting. Can you get a second loan modification?
The short answer is yes; obtaining a second loan modification is generally possible. The longer answer is that whether you (or any particular individual) can get a second modification depends on your specific circumstances.
Getting a Second Loan Modification From Private Lenders
Most homeowners have a reasonable chance of obtaining a second modification, particularly if several years have passed between the first loan modification and new request. When there's been a substantial number of years between the first modification and the second request, the lender is likely to have more confidence that the borrower will handle their payments responsibly and understand that they've fallen on difficult times again.
However, even if you've obtained a loan modification relatively recently, you still may be able to negotiate a second one, although it may be more somewhat more challenging.
In either case, you must show that you're suffering economic hardship, usually an unavoidable one, such as a job loss, a medical emergency, or the death of a wage earner in the household. Also, be prepared to demonstrate that you have a stable income and that you will be able to repay the loan in a timely fashion with a second modification.
As the first time around, you must collect all relevant documentation proving both the hardship and your ability to pay. For example, you'll want to provide recent pay stubs or other proof of income, your tax returns, current bank statements, and expense sheet detailing your monthly expenses. You should also write a hardship letter detailing why you are struggling financially and explaining why you have fallen behind on your payments.
You should not delay in asking for a second loan modification. Once you're at least 60 days behind in loan repayments and realize that the situation will not improve, you should promptly contact a real estate loan modification lawyer and start the application process for modification.
Second Loan Modification for Fannie Mae-Backed Loans
If you negotiated the first loan modification through the now-defunct Home Affordable Modification Program (HAMP), their guidelines dictate that you may seek a second loan modification if:
- The mortgage loan is delinquent or in imminent default.
- The mortgage loan hasn't been modified three or more times, regardless of the loan modification program.
- The mortgage loan hasn't received a Flex Modification and become 60 days or more delinquent within 12 months of the modification effective date without being reinstated.
- The borrower hasn't failed a Flex Modification Trial Period Plan within 12 months of being evaluated for eligibility for another Flex Modification.
If you're seeking a second loan modification from Flex Modification Program, after receiving the first modification from them, you will only be eligible for a second modification if the modification results in a payment reduction.
If you have any questions about loan modification or need assistance with the loan modification process, contact an experienced New York loan modification attorney today to learn your options.