The financial statement is one of the most critical components of your negotiation.  It is often these figures that are used to determine a new payment amount that the method for arriving at the new payment. 

In order to develop a comprehensive financial statement that is acceptable to the lender, you will need to include copies of your paychecks, monthly bank statements, tax returns, and recurring bills and expenses.  An analysis of this information by your bank will help them determine your eligibility for a loan modification work out plan. If preparing a financial statement is not something you are comfortable with, connect with a NLMAA member for assistance.

In some cases, people feel that they should understate their income in order to ensure that their loan gets modified.  This is not a good idea.  Lenders want to ensure they are working with borrowers that want to keep their home and can also afford to pay for the home under a new plan. 

If you understate your income, you run the risk of the bank rejecting a modification attempt because they feel you cannot live up to the terms of the new agreement.  It is always best to provide a fair and true representation of your finances. 

Lenders will typically expect you to have between 10 and 20% of your take home pay available as disposable income after the loan modification process.

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