loan modification

by admin on January 8, 2010

Sample Hardship Letter: A loan modification is a change to the loan contract which is agreed to by the lender and the homeowner. The lender modifies the existing loan(s) in order to work with the homeowner because of a hardship. The purpose is to help make the loan(s) more affordable. Usually loan modifications are in the form of a rate reduction and/or fixing the rate for a certain period of time. In the past, loan modifications were only utilized when a borrower was delinquent and suffered a hardship such as a job loss, divorce, or illness.

Now, borrowers can obtain modifications from their lender for unaffordable rate adjustments on adjustable rate mortgages. The earlier the homeowner addresses the issue, the better the chances are of negotiating a fixed rate and a payment that is manageable.

Now, borrowers can obtain modifications from their lender for unaffordable rate adjustments on adjustable rate mortgages. The earlier the homeowner addresses the issue, the better the chances are of negotiating a fixed rate and a payment that is manageable. Sample Hardship Letter

The following are a sample of hardships that get loan modifications approved:

1. Adjustable Rate Mortgage Reset-Payment Shock

2. Illness of the Borrower

3. Illness of a Borrowers Family Member

4. Curtailment of Income

5. Loss of Job

6. Abandonment of Property

7. Property Problem

8. Inability to Sell the Property

9. Inability to Rent the Property

10. Mortgage Servicing Problems

11. Transfer of Ownership Delays

12. Reduced Income

13. Failed Business

14. Job Relocation

15. Death of the Borrower

16. Death of Spouse or Co-Borrower

17. Death in the Family

18. Incarceration

19. Divorce

20. Marital Separation

21. Military Duty

22. Medical Bills

23. Damage to Property (natural disaster or unnatural)

 

Notice that “My Realtor lied to me” and “My loan officer/broker lied to me” is not on this list. Keep this in mind when you write a hardship letter. Documenting the hardship is very important to the lender’s or servicer’s loss mitigation department and will be verified during the approval process. Without proper documentation, your file may be flagged as fraudulent. You definitely do not want this to happen for obvious reasons and it will slow down the process or terminate the process completely. Sample Hardship Letter

 

There are two important things to remember about loan modifications:

1. A loan modification should be requested only if no other reasonable options are available and/or the homeowner is experiencing a hardship.

2. Loan modifications are designed for homeowners who can afford their homes but not their loans.

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can i get a loan mod

by admin on January 7, 2010

Sample hardship letter: How to Determine if You are a Candidate for a Loan Modification

Lenders and servicers will, in general, look for one thing when you submit a modification request. They look for a documentable hardship of course, but at the end of the day if they decide to grant your request for a loan modification all they really want to know is if you can afford the new payment(s). This is the big secret behind getting a loan modification approved.

 

There is, however, an art to making loan modifications work. You must disqualify yourself from your old payments and at the same time qualify yourself on a new payment structure. It sounds complicated and it is at first but you will quickly learn important strategies for effectively processing loan modifications.

 

To understand what the lender or servicer considers qualified, you have to know how lenders calculate your income. The income you can use to qualify for a modification is different from traditional income calculations used to qualify for traditional loans. Moreover, the difference in the qualification guidelines is typically in your favor.

For a modification, you can qualify based on your documentable total household income. As such, you can count income from almost any source: Grandma’s SSI, income from child day care services, from a second job paid under the table, etc. so long as it can be proved. Proof must be in the form of bank statements, 1099’s or in some other documentable form as outlined in the submission paperwork you will provide the lender. In addition, if only one of two spouses was on the original loan, the other spouse’s income can count so long as it is documentable.Sample hardship letter

Once you calculate all documentable monthly income from all household sources you then have what you can present to the lender as the new qualifying income.

To calculate a qualifying monthly mortgage payment, use the benchmark fully amortizing 5.00% rate on whatever the new balance might be, counting arrearages if they are added back into the loan. WARNING: this is only for a general qualifying exercise only; do not expect this rate or payment! If the payment at 5.00% is just too high, then you may not be an appropriate candidate for a modification. However, you can still request help with other services such as a deed in lieu of foreclosure, a short sale or postponing as long as possible a notice of trustee’s sale in an effort to help you transition to more affordable housing.Sample hardship letter

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Communicating a Hardship Effectively

January 6, 2010

Sample Hardship Letter: Effective communication is the single most important aspect of describing hardship issues. Many modification requests fail because the homeowners can not tell their story in a simple way. It is easy to forget there is a real human being analyzing the hardship letter within the lender’s or servicer’s loss mitigation department who [...]

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Forensic Loan Audit

January 6, 2010

Sample Hardship Letter: Reasons to Conduct a Forensic Loan Audit
Obtaining a Forensic Loan Document Audit is essential in every Loan Modification, Short Sale, and Deed in Lieu resolution. The findings of an audit can significantly improve your chances for a positive resolution. The following are common reasons to conduct a forensic loan audit:
1. General Loan [...]

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Qualified Written Request

January 5, 2010

Sample Hardship Letter: To perform the most comprehensive forensic loan audit you should compile all of the loan documents you maintain and get all of the loan documents your lender maintains. A Qualified Written Request (QWR) is a written demand to your servicing company. After receiving a QWR, the servicing company has twenty days to [...]

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Foreclosure or Bankruptcy?

January 5, 2010

Sample Hardship Letter: The single most important question consumers ask themselves during the foreclosure process is whether it is better to lose their house to foreclosure or file for bankruptcy protection.
A foreclosure will remain on your credit report for 7 years, while a bankruptcy remains for 10 years. If you ever plan on getting any [...]

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Principle Reduction

January 4, 2010

Sample Hardship Letter: Principle Reductions: Wipe Out Your 2nd Mortgage with Bankruptcy
Millions of American homeowners are now upside-down on their home mortgage and they are looking for a way out. In some areas like the Inland Empire of California, local homeowners have seen values drop 30-50% and many are making a “business” decision to walk [...]

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Stripping the Lien, Cram Down or Strip Down

January 3, 2010

Sample Hardship Letter: When a judge removes the second mortgage during bankruptcy proceedings it is referred to as “stripping” the lien, a “cram down” or “strip down.” This can happen if the loan is secured by other collateral that is part of the bankruptcy filing or if the home is not your principal residence or [...]

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Deed in Lieu of Foreclosure

January 2, 2010

Sample Hardship Letter: For home borrowers (mortgagors) facing foreclosure, a deed in lieu of foreclosure provides an alternative solution to the standard default process. In particular, the deed grants the lender, the “mortgagee,” full rights to the property title to satisfy the conditions of the loan. Such agreements are a common form of mortgage contract [...]

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Short Sales

January 1, 2010

Sample Hardship Letter: If you find yourself in a difficult real estate situation where your home and loan is upside-down, don’t fret, a short sale might just be the answer to help cure your mortgage woes. In today’s market, it is imperative that you take a step back from all of the noise to reflect [...]

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