Hardship Letter: If you didnt know the real estate market has snowballed into what can only be explained as a major one crisus. With unemployment at its peak and people losing jobs, many are finding it difficult to make mortgage payments.
Hence, as foreclosures have become common the Federal government has come up with a program to help homeowners through this crisus. As part of the program, the homeowners are getting the option of revising troubled loans, first on a trial basis and then on a permanent basis. If the homeowner is able to pay the revised loan for three months, then only he gets the opportunity for permanent modification.
Supprisingly, a large majority homeowners who have signed up for the program have not sent in the necessary documents (including their Hardship Letter). This highlights the problems being faced by the government to stem the tide of foreclosures.
There is a program that allows a borrower to pay interest rate of 2 per cent on loans. The borrower can do it for five years. After three installments of temporary modifications, the borrower has to give some documents including a financial Hardship Letter and proof of income.
Even the lenders have not been able to address the foreclosure crisis effectively. This has drawn the flak of House Financial Services Committee. The program was started in March and since then the banks have modified loans of 680,000 people. The numbers are much less than what the administration had set its goal at – 4 million.
Critics observe that the banks are at fault. There is increased anger at lenders and people are asking Obama to adopt a tougher stance. The Treasury Department’s assistant secretary, Herbert Allison said that the government should have adopted strong measures.
He said that lenders who are doing a good job should be appreciated while those who are not should be publicly spoken against.
The bank officials say that there are many factors responsible for this; miscommunication with clients, misunderstanding about requirements and inability to listen to some borrowers. Such explanations prompted House members to come up with more programs to stem the crisis only time will tell if it works..
