Loan Modification Hardship Letter
As unfortunate as it is having to write about the subject of hardships, loan modifications, and short sales, I feel compelled to post an article to clarify the loan modification process and the importance of a well written, well thought out hardship letter. As you may have guessed, you will also need a hardship letter should you attempt to get an authorization for a short sale.
Lenders currently have an outrageous number of loan modification and short sale requests. They are literally stacked on asset managers' desks. With this in mind, it is in your interest, when deciding what to put in a hardship letter, to put forth your best argument as to why you are a good candidate for a loan modification. For the purpose of this article, loan modification may include interest rate reductions, interest only periods, increased loan term, decreased principal balance, removal or reduction in prepay penalties, or any combination of these items.
There are many acceptable reasons the banks may consider a loan modification. A few of the more acceptable reasons are below (If more than one of these apply to you, the better your position):
1. Income change (negatively impacting your ability to pay your bills)
2. Loss of Job
3. Death or Illness in the family, or affecting the family
4. An adjustment of your interest rate when your loan is an ARM (adjustable rate
mortgage)
5. Divorce of principals on the loan
6. Relocation of homeowner (for an acceptable reason)
7. Increased financial burden (new unexpected debt, federal or state tax issue,
law suit settlement, etc.)
Once you've decided that one or more of the above hardships apply to you
(or other hardships as reasonably make sense), you'll need to craft an
impeccable letter (if you need help on this, email me for individual assistance)
logically spelling out your hardship, how you ended up where you are now, and
why a loan modification will solve the problem. Understand that you will need to
be able to reasonably back up the information you include in your hardship
letter. DO NOT include information in your letter which is absolutely
false. If you do, when the bank asks for confirmation of the information,
you'll be in a pickle. Don't place yourself in this situation.
You can also expect that the lender will require your financials (recent
statements of income, expenses, etc.). Each lender is different in this
regard, but you must prepare for an extensive inquiry.
READY? Get out the paper (or computer), write an outline of the letter (include topics you're going to expand on), then get specific about your hardship and how a loan modification will correct the problem and keep it from happening again. If the bank doesn't see an end to the problems you're having, they'll be less likely to give you the attention you're requesting. Ideal length for your letter is between 1 full page up to about 1 1/2 pages... you definitely shouldn't go over the 2 pages in length.
ONE LAST ITEM: Don't ask for a loan modification if you obtained your loan
by embellishing the facts on your application. Your actions may implicate
you in having committed loan fraud.
If you have an item of interest in the Corona area... email
CoronaRealEstateNews@myagentgateway.com and I'll add any appropriate content to the
site.
Cameron Novak
The Homefinding CenterTM
Corona, California
951-212-7479
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As the majority of Eastvale residents of Corona, California can attest, the number of foreclosure sales in our community has had a devastating effect on home values. Some homes have lost as much as 50% of their value in the past 2+ years. As a result of this value decline many Eastvale residents find it necessary to sell their homes, but find the value of their home isn't sufficient to pay off the mortgage owed to the lien holder (bank).
The importance of working with a real estate broker with a track record of successfully assisting homeowners with short-pay (short sale) situations cannot be overstated. The following is an absolute must if your goal is to obtain a loan modification OR short-pay (or short sale) approval:
You must hire a broker who knows how
to contact the lender's loss mitigation
department with your authorization and
negotiate a favorable outcome while at the
same time guarding against the possibility
of the lender pursuing you afterwards for a
deficiency judgment. A short sale
deficiency judgment is the amount that was
unpaid after the sale proceeds were
completely exhausted. Do not contact the
bank without the representation of an
attorney or a real estate broker. Attorney's
will typically charge you for their services
regardless of outcome. Top real estate
brokers are able to negotiate their fees
from the lender, while the home owner is
relieved of paying any real estate fees.
Bookmark this page and return frequently for Eastvale updates.
If you have an item of interest in the
Eastvale neighborhood... email
Eastvale@myagentgateway.com and I'll add
any appropriate content to the site..
Cameron Novak
Eastvale Real Estate Broker
The Homefinding Center
Corona, California
951-212-7479
Corona Short Sale Agent Profile
Corona Short Sales and PMI disasters
Corona homeowners beware...
If you are a Corona homeowner and are considering a short sale solution to your negative equity position, you'll definitely need to know if you currently pay PMI (mortgage insurance). PMI companies are fast becoming thorns in the side of those negotiating with the banks towards selling their homes short (short pay or more commonly called... Short Sale).
If you have PMI, please let your agent know up front when explaining your situation so they will know how to proceed on your behalf. These companies can be dealt with during the short sale process, but they typically are looking for some type of seller concession. Make sure you have an agent who will agressively negotiate on your behalf with all parties involved.
Cameron Novak
Corona Short Sale Specialist
The Homefinding CenterTM
Corona, California
951-212-7479
Corona Short Sale Agent Profile
