Hardship Letter:When you are on the brink of foreclosure, a lender may claim to rescue you from this situation by refinancing your loan with lower mortgage payments. In the beginning, the mortgage payments are considerably low as you are paying the interest only. At the end of the term, you suddenly realize that the total amount you borrowed is still due in a lump sum balloon payment. If you can’t make the entire balloon payment or get your loan refinanced, you may lose your home to that lender.
In a phony loan transaction, a lender introduces you to a refinancing loan document that claims to bring your neglected loan current. However, the document may transfer the title of your home to the company’s name for a very small part of its value. Many times, the loan’s terms will include prepayment penalties, balloon or interest-only payments, huge fees and immediate rate adjustments. Therefore, it is prudent to get all legal documents assessed by your attorney before signing them. (For related reading, check out “Mortgages: Fixed-Rate Versus Adjustable Rate” and “ARMed And Dangerous”.) Sample Hardship Letter
