As difficult and stressed as things may be, the lender is going to want some information about your financial situation as part of their decision to accept a lowered payoff amount. The information needed is similar to the information needed to complete a mortgage application, except, instead of trying to prove your credit worthiness, you are trying to prove your financial insolvency.

Here is a list of items you may need:

• A hardship letter explaining your financial situation. Include what you have done to rectify the situation.
• Documentation on any other liens against the property.
• Bank statements.
• Pay stub and W2’s.
• Monthly bills, especially utility bills on the property.
• Property taxes.
• Homeowner insurance policy