In today's unstable economy, many homeowners are facing the possibility of foreclosure. Foreclosure allows lenders to seize control of the property that payment is defaulted on. Because many mortgages are not being paid due to the recession and other hardships, a considerable number of people are losing their homes. The federal government has developed a program that assists homeowners with their mortgage payments by changing some of the terms on the loan.
The Hardship Loan Modification Program allows homeowners to collaborate with lenders, so they can alter the original mortgage contract. New negotiations of a mortgage may include lower interest rates, adjustment of variable or fixed rates, deferred payments, or changes regarding interest-only payments. The goal of the revision is to lower the monthly mortgage expense and make it affordable. A loan mod is a renegotiation, therefore the old agreement is no longer legally valid.
To qualify for a modified loan, a homeowner must have proof of hardship. Financial difficulties due to job loss, pay cuts, divorce, and health problems will qualify a person for a load modification. Many lenders will consider making adjustments if the interest rate drastically increased because of a variable rate agreement.
To prove financial adversity, a hardship letter must be submitted to the financial institution that holds the mortgage. The letter should be brief and focus on the details concerning the financial difficulty. Proof of income, bank statements, budget description, divorce decree, and medical statements should be submitted with the letter. The letter should not be a sympathy plea. It should clearly state the request for modification of the payment and the vow to meet each payment due date. A request for a specific monthly amount should also be mentioned. If a foreclosure has already been threatened, it is best to enlist the help of a mortgage counselor, so the form gets filed quickly and properly.
If the hardship letter is submitted correctly, there should be no difficulties gaining approval. Because of the decrease in property values, many lenders would rather modify loans than foreclose on low-value property. Once the approval is met, the lender will work with the homeowner on drawing up a new contract. The old mortgage may be refinanced completely, or some of the terms may be changed.
Hardship loan modification can help many people facing property foreclosure. It is a simple solution that can get homeowners on the right financial track.
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