mortgage

5 steps to a successful loan modification

Own up to your role in the mess
Own up to your role in the mess

Housing counselors must summon diplomatic skills when talking with troubled borrowers. Counselors gently tell homeowners to cut back on spending. And counselors often have to prod borrowers to provide more accurate financial information to servicers.

Hunt says homeowners often report inaccurate income and budget figures to servicers and overestimate some expenses. That results in unsustainable workout offers.

"Maybe they hadn't taken some (budget) reductions that they could have, or they underestimated their income because they wanted to be on the conservative side," she says. "And while we always want homeowners to be truthful, we also want them to be realistic."

Lewis says that when a borrower inflates monthly expenses, it's important to go back into the budget, identify real expenses and slim them down.

"Usually it's a matter of coming back and crunching the numbers again, and really looking at that budget," Lewis says.

Then, the new income and budget figures are sent to the servicer, "and most of the time you are able to come back with something affordable," Lewis says.

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