BE PREPARED
The three main requirements:
Hardship
Homeowners must show a viable hardship. The hardship must change the homeowners financial situation to a point where their buget has gone negative. The bank originally made the loan with a payment to income ratio. If the income is lower the payment must be reduced to give the mortgage a mathmatical chance of success.
Negative budget balance
Homeowners must document their income and expenses. Recent paystubs, copies of expenses, tax returns, may be required to show the homeowners budget. Knowing how far out of budget a homeowner is gives the benchmark for how far the payment on the mortgage needs to be effected by the modification.
The modification must balance the budget
The final modification must balance the budget. It can not be approved if does not allow the homeowner to continue making payments for the life of the loan. Guidelines have been put into place for the payment to income ratio.