Guide to Loan Modifications for Non-PennyMac Customers

Because PennyMac works hard to help borrowers stay in their homes, we often receive requests to modify loans from people who are not our customers. At this time we are only working on PennyMac customer loans, so we created this overview of the process to help prepare you to contact your own lender.

If you have not already done so, you should first read the article What is a Loan Modification? Then, prepare yourself for talking with your own lender with these three steps:

Step One - Assemble Financial Paperwork

Your lender will want to see some of the following documents to give them an idea of your monthly income and expenses. Be truthful and accurate about your financial obligations. After all, the goal is to create a payment plan that you are financially capable of paying. Gather the following:

• Most recent mortgage statement, including loan number and property address
• If you are an employee, gather two most recent months of pay stubs showing year-to-date earnings
• If you are self-employed, you’ll need your most current signed tax return, including all schedules
• Two most recent monthly bank statements
• Two most recent investment account statements (brokerage, 401k, etc.)
• List of current monthly expenses and/or copies of bills (utilities, credit cards, other loans)

Step Two – Write a Hardship Letter

You should prepare a letter or statement to your lender that explains the reason you are asking for assistance. Tell why you are unable to afford your current monthly payment, or why you may have missed payments in the past. Did your income change? Did you suffer a hardship? Did your rate adjust and you can’t afford the new payment?

Also, provide the lender with reasons why you think you are a good candidate for a modification. Has your financial situation improved? Is your hardship temporary? Will you be able to continue to make payments in the future but need help catching up? How much of a payment can you afford?

It’s more important that the letter be written in your own words than it is to use formal language and proper spelling. Don’t worry about writing a perfect letter – just make sure you write an honest letter about your own situation. If you would like to read some example letters, you can do an online search for "sample hardship letters," but be sure to write your own letter about your own situation. You can also get help writing a letter by contacting a free consumer credit counselor. Visit PennyMac’s Helpful Websites page for more information on credit and mortgage counseling.

Step Three – Contact Your Lender

When you call your lender, ask for the Loss Mitigation department. Tell then you are seeking assistance to stay in your home and would like to discuss the possibility of a loan modification. They may want you to mail or fax them copies of your financial paperwork and hardship letter. It will be helpful for you to keep notes and records of all conversations you have, including the date and time of your call, the name of the person you talked with and what was discussed. Be truthful in all conversations, and follow the instructions of your specific lender.