Any hardship you are going thru that causes you to fall behind on your home loan payments may seem like an Acceptable Hardship for Loan Modification to you, but to your lender, only certain circumstances will qualify as an Acceptable Hardship for Loan Modification.
Here are the generally acceptable hardships for loan modification that your lender will consider:
- Adjustable rate Mortgage Reset-Payment Shock: many homeowners unknowingly signed for loans that had “teaser” rates that initially were very low, making for an affordable payment. However, when the interest rate adjusted up and the payment skyrocketed, borrowers could no longer afford their loan. If you had one of these loans, your lender may consider lowering and fixing your interest rate
- Death of a spouse or co-borrower: The death of a family member very often causes severe financial hardship. The loss of a second income, final expenses and time lost at work can all create a hardship situation causing a borrower to fall behind on their payments.
- Divorce or separation: The vast majority of borrowers rely on two incomes to meet their monthly obligations. The loss of one source of income can be devastating and not easily replaced.
- Failed Business: Tough economic times are just a plain fact of life right now. Many small businesses are failing and borrowers are scrambling to find employment in a tight market. If you can show your lender that you have found new employment and have a source of income, they will consider lowering your payment to match your new circumstances.
- Injury/Illness/Medical Bills: There are some things we just cannot be prepared for. An unexpected illness, injury and the accompanying medical bills are all reasons to fall behind and are considered an acceptable hardship for loan modification.
- Job Relocation: Due to the current housing crisis, selling your home on short notice may not be a viable option. It may be better to wait out the market with a new lower monthly payment.
- Military Duty: We are at war, and many families have had a family member deployed, resulting in a severe cut in pay or loss of income. This is an acceptable hardship for Loan Modification.
- Loss Of Job: Thousands of companies across the country have either closed or cut their staff drastically. If you fell behind due to job loss, but are working again, the lender will consider that an acceptable hardship for loan modification.
- Reduced Income: Whether your hours have been cut or you had to accept a lower paying position or job, you are just not bringing home enough money to meet your current monthly payments. Your lender can negotiate with you to lower your monthly mortgage payment to avoid foreclosure.
The items shown above are the generally acceptable hardship for loan modification most lenders use. However, each borrower has a unique set of circumstances. A compelling and concise loan modification hardship letter can go a long way with your lender to convince them you deserve a second chance with a loan modification.
Before you contact your lender about a loan modification, take the time to get informed and educated about the process. You have one shot to save your family home, so make sure you are knowledgeable and prepared. The Complete Loan Modification Guide is a great , low cost source of information. You will learn the 7 Steps to a Successful Loan Modification, as well as receive invaluable insider tips and negotiating secrets. You are provided with all of the necessary forms, as well as detailed instuctions on how to complete them properly. Give yourself a fighting chance to save your home!
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