Stop Foreclosures: Outlining the Financial Hardship
It's time to the action recommended to stop foreclosures, and pick up that phone to call your lender. You have followed advice and prepared your current financial position and an outline of a budget for the next 6 months. You still can't make that decision for yourself; whether to put the family home up for sale and accept ANY offer that means you can walk away with a little cash in hand or, appeal to the Bank for some form of workout. Should you try for refinancing foreclosure help, or just go with the inevitable foreclosure and its result; the forced loss of your home, pride, and reasonable credit rating? You feel your case is borderline, current mortgage related outgoings are just on 40% of the household net income, and the second loan is an adjustable rate interest only policy. It's time to take the sorry picture to the Bank.
The key to a receptive hearing with a good outcome may lie in your hardship letter. From the bank's viewpoint, a successful workout depends on the nature of the financial hardship suffered and the borrower's ability to keep future payments current. The choice of options such as agreeing to a pre foreclosure sale with a possible short sale scenario, or a Deed in Lieu, will depend on the nature of the financial hardship and that to avoid foreclosure is impossible. It's time to write the Hardship letter.
The letter is just one of the documents necessary for a successful workout application to your Lender. For many in great financial distress this year, it could be one of the hardest letters to write effectively. The temptation to write a list of complaints is strong, starting with the premise that you were duped into making a poor decision, or worse, that you are part of the sub prime loans mess, you couldn't know 2 years ago that the value of your home would decrease and the world (and your banker) owes you a respite. This won't get you where you need to go. State the historical facts and state them clearly, and without entering into the blame game. The disastrous effect on you and your family will be obvious to a lender who has received many such applications. Outline the involuntary nature of the hardship, for example job loss, or illness affecting household incomes combined with a resetting ARM, the erosion of your equity which means you have been unable to refinance with lower interest rates. Give details of steps you have already taken up to this point. Ensure the facts are presented in the timeline in which they occurred, without emotion and simply.
Your letter must finish with your suggested solution(s), with options if you are unable to decide which is preferred. Give your reasons that these solutions will succeed in stopping foreclosure, how you plan to meet the commitments in the future, or how you will go about selling your home in pre foreclosure. Or alternatively that circumstance is such that you doubt your ability to succeed as others have done to stop foreclosures and that you will seek other expert help.