- Wells Fargo Refinancing For Existing Customers
- 2015 Government Mortgage Help targets FHA Programs
- How to Find Cheaper Closing Costs on your Mortgage
- Obama Extends the HARP Refinance Program for 2013
- IRS Supplies Guidance on Home loan Modifications
- Indiana State Mortgage Help for Those in Danger of Foreclosure
- Mortgage Assistance Available in Oregon
- Wisconsin Mortgage Assistance Programs
- How to Write the Mortgage Hardship Letter
- CHFA EMAP Program for Homeowners
Writing the ‘Hardship Letter’
One of the items your Bank or lender will require from you during the loan modification process is a hardship letter. A hardship letter is typically a written reason as to what happened that has caused you to fall behind on your mortgage and it is a key item in helping you stop foreclosure or modify your mortgage agreement.
This letter acts much like an outline or biography of your current issues that are affecting your ability to meet your financial obligations, and by this we mean not being able to afford your mortgage. Lenders do look for what is known as a hardship letter when a borrower applies for a loan modification. Such a letter is a requirement for modification applications under the government’s Making Home Affordable program.
A hardship letter is not the basis for modification approval that depends on the borrower’s financial situation and the red tape of the various government and Bank programs. Rather, the purpose of the hardship letter is to explain upfront, in simple language, why borrowers missed payments, and what they propose as a solution.
less is more when it comes to writing a hardship letter,giving them exactly what they need and nothing more
The lenders’ loss mitigators, faced with mountains of modification requests, are unlikely to spend time reading more than the first few lines of each letter.
And there is always the risk that borrowers who go on at length could unknowingly trip themselves up with unnecessary details that raise red flags for a mitigator.
When the housing bubble burst, home values dropped, and millions of homeowners who did the right and responsible thing—shopped for a home, secured a mortgage, and made their payments on time each month—were left with houses worth less than they paid for them and mortgages worth more than their homes. Today, many of these homeowners are locked out of refinancing because they are underwater.
The hardship letter should open with a succinct explanation of why the borrower stopped paying the mortgage. The letter should cite a reasonable specific hardship, like a lost job, illness or reduced income.
Next, the letter should briefly cite any steps the borrowers took to avoid defaulting on their loan, like cutting household expenses or tapping into savings.
If their financial situation has since improved, or is likely to, borrowers should mention that as evidence that their hardship was temporary and won’t hamper their ability to make payments on a modified loan.
Finally, the letter should state exactly what borrowers are applying for. Is their proposed solution a lower interest rate, for example, or a principal reduction?
Borrowers who are underwater that is, owe more on their mortgage than their property is worth may ask their lender to consider a short sale, in which the house is sold to another buyer for less than the amount owed. Its widely advised that homeowners considering a short sale apply to the bank before putting their house on the market.
The fact that a home has lost considerable value should not be cited as the sole hardship. The borrower might include that information in the hardship letter, but he or she must also explain the inability to pay the mortgage
In the case of a short sale, the hardship might be the borrower’s need to sell right away because of a job transfer or long-awaited employment opportunity elsewhere.
One of the items your lender or servicer will ask for during the loan modification process is a hardship letter. A hardship letter is a written explanation as to what “event” has caused you to fall behind on your mortgage and it vital in helping you stop foreclosure.
This letter acts much like an outline or biography of your current “life” issues that are affecting your ability to meet your financial obligations.
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