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The New York Times
Writing the â€œhardship letterâ€!
Homeowners having trouble paying their mortgage are often required to
write a hardship letter when applying for a loan modification. Such a
letter is a requirement for modification
applications under the governmentâ€™s Making Home Affordable program.
Making sense of the story.
A hardship letter is not the basis for modification approval â€“ that depends on the
borrowerâ€™s financials and the intricacies of the various government and in-house lender
The purpose of the hardship letter is to explain upfront why borrowers missed
payments on their home in Brentwood CA, and what they propose as a solution.
Some housing experts recommend that homeowners write short letters, using the
philosophy that â€œless is more.â€
The lendersâ€™ loss mitigations, faced with mountains of
modification requests, are unlikely to spend time reading more than the first few lines of
Also, there is the risk that borrowers who missed payments on their home in Brentwood CA, Â go on at length could unknowingly trip themselves up with unnecessary details that raise red flags for a mitigator.
The hardship letter should open with a succinct explanation of why
the borrower stopped paying the mortgage on their home in Brentwood CA..
The letter should cite a specific hardship, like a lost job, illness,
or reduced income.
Next, the letter should briefly cite any steps the borrower took to avoid defaulting on their loan, like cutting household expenses or tapping in to savings.
If the borrowerâ€™s financial situation has since improved, or is likely to, borrowers should
mention that as evidence that their hardship was temporary and wonâ€™t hamper their
ability to make payments on their home in Brentwood CA, with a modified loan.
Finally, the letter should state exactly what borrowers are applying for. Is the proposed
solution a lower interest rate, for example, or a principal reduction?
Borrowers who are underwater â€“ those who owe more on their mortgage than their
property is worth â€“ may ask their lender to consider a short sale, in which their home in Brentwood CA is sold to another buyer for less than the amount owed.
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