Loss Mitigation Application Checklist: What Your Servicer Will Ask For

The servicer sent a thick packet, a list of documents and a warning that incomplete applications won’t be reviewed. You want to send it once and have it count.

Most servicers ask for the same core documents. Send all of them together, keep proof of what you sent, and read the servicer’s acknowledgment letter closely, because federal rules attach real protections to an application the servicer treats as complete.

What is a loss mitigation application?

It’s your request for an alternative to foreclosure, such as a forbearance, repayment plan or loan modification, along with the information the servicer needs to evaluate it. The servicer is the company you send your payment to.

The federal mortgage servicing rules, a part of the CFPB’s Regulation X, set the process. They don’t require the servicer to approve any particular option. For what the options are, see what loss mitigation is.

What documents will my servicer ask for?

Requests vary by servicer and by who owns the loan. This is the list I’d expect to fill.

• The assistance application. For loans owned by Fannie Mae or Freddie Mac, that’s Form 710, now called the Mortgage Assistance Application (older versions were called the Uniform Borrower Assistance Form). Other servicers may use their own form, so fill out whichever one you’re sent, and sign and date it.
• Proof of pay. If you earn wages, your most recent pay stub showing year-to-date earnings. Some servicers want more than one, so send what the list asks for.
• Bank statements. Your two most recent statements, every page, including the blank ones.
• Tax returns. Your most recent federal return, signed. Some servicers also ask you to sign an IRS form that lets them pull your tax transcript.
• Self-employment income. A recent signed and dated profit and loss statement, meaning a summary of what the business took in and paid out, usually for the year to date or the last quarter.
• Other income. Award letters for Social Security, pension or disability benefits, and proof of any rental income you want counted.
• The hardship explanation. The form’s hardship section, a hardship letter and any proof the servicer asks for, such as a divorce decree or death certificate.

For the letter itself, my post on how to write a financial hardship letter covers the structure, and these sample hardship letters cover job loss, medical problems, divorce, a death and a furlough.

What does “complete application” mean?

Under Regulation X, an application is complete when the servicer has received all the information it requires from you to evaluate the options available. The servicer decides what it requires, and it has to use reasonable diligence to get anything missing.

That’s why “complete” is the word that matters. Nearly every protection below turns on it.

If the servicer tells you what’s missing and you send all of it, the rules treat the application as facially complete, meaning complete on its face. If the servicer later finds it needs more, it has to ask promptly and give you a reasonable chance to supply it.

What does the servicer have to do when it gets my application?

Acknowledge it. If the servicer receives your application 45 days or more before a foreclosure sale, it has to tell you in writing within 5 days, not counting weekends and legal public holidays, that it received the application and whether it’s complete. If it isn’t, the notice has to list what’s missing and give you a reasonable date to send it.

Evaluate it. If the servicer receives a complete application more than 37 days before a sale, it has 30 days to evaluate you for every option the loan’s owner offers and send a written decision. That letter says which options, if any, you’re offered and how long you have to accept.

Explain a denial. If you’re denied a loan modification, the letter has to give the specific reason. Read it carefully, because the reason tells you whether to appeal or reapply.

Can the servicer foreclose while my application is pending?

Before the foreclosure starts. A servicer generally can’t make the first foreclosure notice or filing until you’re more than 120 days behind. If your complete application is in before that first filing, the servicer can’t start the foreclosure until it has finished with your application.

After the foreclosure starts. If a complete application arrives more than 37 days before a scheduled sale, the servicer can’t ask the court for a judgment or order of sale, or hold the sale, while it’s under review.

When the protection ends. It ends if you’re denied and your appeal rights are used up or expired, if you turn down every option offered, or if you don’t keep up with the option you accepted. An incomplete application, or one that arrives too close to the sale, may not stop anything.

Can I appeal a denial?

If the servicer received your complete application 90 days or more before a scheduled sale, or during the first 120 days you were behind, you can appeal a loan modification denial within 14 days after the servicer sends its decision. Different people have to review the appeal, and the servicer has 30 days to answer.

That answer is final under the federal rules. I cover the common denial reasons and when an appeal is worth it in why loan modifications are denied.

How should I send the package?

Send it once, all together. Put your loan number on every page and include a cover sheet listing each document.

Keep proof. Use the servicer’s upload portal and save the confirmation, or send it with tracking. Keep a copy of every page you sent.

Watch the dates. Answer any missing-documents letter by the date it gives you, and replace pay stubs and bank statements before they go stale.

Ask for your contact. Federal rules require the servicer to assign personnel to you by the 45th day you’re behind. Those people have to be able to tell you the status of your application and what’s still needed.

Do these rules apply to every mortgage?

No. The loss mitigation rules cover loans on your principal residence, not rental or second homes, and they don’t apply to reverse mortgages.

Small servicers, a category defined by the federal rules, are exempt from most of them. Even a small servicer has to wait until you’re more than 120 days behind to start a foreclosure, and it can’t proceed while you’re keeping up with an option you agreed to.

State law adds its own steps on top, and DC, Maryland and Virginia handle foreclosure very differently. In Maryland, for example, an owner-occupant can request foreclosure mediation through the circuit court, but only on time, as I explain in the Maryland foreclosure process.

What should I do right now?

If no sale date is set, gather the documents on this list and send the complete package this week. If a sale date is set, or the servicer keeps calling your file incomplete, call me at (202) 448-5136. If you already have a lawyer in a filed foreclosure case, call that lawyer.

The consultation is free. I’ll review the package, tell you what the servicer still needs and how much time your state gives you.

Don’t wait. Every protection here depends on a complete application arriving in time.