"What should I tell my lender?" this is a question we get in our office all the time and honestly there is not a short answer. In this article I will focus on exactly what your lender wants to hear. For more information on writing a foreclosure hardship letter check out my popular FREE special report "How To Write A Killer Hardship Letter" available on my website.
What your lender wants to heat is actually pretty straight forward because your lender looks at the situation from a strictly financial perspective. When you get right down to it there are only a few things your lender really cares about.
Do You Have A Qualified Hardship?
It all boils down to "a change" which has left you with either less income or more expenses. You must prove to your lender that you have a "qualified hardship."
The truth is that there are only two qualified hardships!
#1 A sudden and unavoidable loss of income
#2 A sudden and unavoidable increase in expenses
Is Your Hardship Resolved?
One of the primary questions your lender will have is whether or not the hardship you suffered to make you fall behind in the first place is resolved. Remember, though, the bank only cares about the financial effects of the hardship - so if you have been able to replace the income lost due to the hardship, they'll be satisfied. As long as you can demonstrate that the hardship is resolved for the foreseeable future, that is.
Do You Have Dependable Income?
If you have dependable, verifiable income, the bank will be satisfied. It doesn't have to be from a job. But if it isn't, they will need documented proof the income will continue for the foreseeable future.
Do You Have Enough Income?
In addition to having enough income to pay your mortgage every month, your lender is going to want to see your monthly budget to make sure you can afford all of your other bills and debt in addition to the loan payment you negotiate. As part of your hardship package, you will have to fill out a budget analysis to let them know exactly what you earn and what you spend.
What Sacrifice Are You Willing To Make?
You want to give your lender a warm and fuzzy feeling all over? Don't be the victim. Take an active roll in making this loan modification work for everyone. Are you willing to make any sacrifices to stay in your home?
- -Are you willing to cut off your cable TV to save $69.00 every month?
- -How about canceling the cell phone to save another $69.00?
- -Could you mow your own lawn instead of hiring someone?
- -How about that gym membership you never use but are still paying for? You had better not cancel this one, you never know when the mood might strike you to get in shape.
How Much Money Are You Willing To Contribute Today?
If you have one month's mortgage payment saved then that would be a good offer. Lenders sometimes ask for a "Good Faith Deposit" when you sign your modification agreement. This is more common when a lender is making a huge adjustment to your interest rate or rolling a large amount of back payments into the principal balance of the loan.
One loan we just completed the modification on had over $29,000 in past due payments which were all added back into the loan balance to bring the loan current, the interest rate was also slashed. The lender only wanted $2,500 as a "Good Faith Deposit" - now that's a bargain.
Have You Filed Bankruptcy?
If you have filed bankruptcy to try and delay your foreclosure, your lender will not be legally able to negotiate with you about your loan until:
- -Your case has been dismissed by the judge*
- -The judge removes your mortgage from the protection of the automatic stay*
- -Your bankruptcy is discharged*
* Please consult your attorney
Final Considerations
Do not inflate or deflate the information in your hardship package to make it seem more appealing. Lenders have "norms" they expect to see and if your information is outside of those norms, they will investigate to find out why or simply disapprove your package. Again, try to be as objective about this as possible. If staying in your home long term is going to take every penny you have every month from now into the foreseeable future, you have to ask yourself if that's really what's best for your family.
Writing a hardship letter is not difficult when you know the elements which must be present and those better left out. I recommend using a worksheet like the one included in our popular FREE special report "How To Write A Killer Hardship Letter" which is available on my website. For more information on mortgage modifications, short sales and hardship letters visit our website.
Check out some of my other articles:
"Top 10 Mistakes People Make When Writing Their Hardship Letter And How YOU Can Avoid Them"
"Foreclosure Hardship Letter Part 1 - How To Write A Compelling Hardship Letter"
"Foreclosure Hardship Letter Part 2 - What Your Lender Really Wants to Hear"
"Foreclosure Hardship Letter Part 3 - What You Should NEVER Tell Your Lender"
"Get Your Automatic Mortgage Rate Reduction"
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A killer sales letter consists of 16 components. It is critical that you include all of these items in your sales letter for maximum impact. Following is a list the first 8 items you should include in the order in which they should appear in your sales letter.
Sales Letter Item #1: DEVELOP A HEADLINE. The purpose of your headline is to grab a reader’s attention. The headline can be a few sentences and should be written in a benefit driven manner. The major benefit of your product or service should be stressed. It is recommended to write a few headlines and test their return rates. Format your headline so that the first letter of each word is capitalized, place quotes around the headline, and use a font color of red. These formatting tips have resulted in an increase in sales.
Sales Letter Item #2: SUBHEADING. This is a smaller headline that usually is your second best headline.
Sales Letter Item #3: SALUTATION. A salutation will personalize the sales letter and will initiate a positive relationship with the customer. It is recommended to use a salutation of “Dear Friend".
Sales Letter Item #4: OPENING PARAGRAPH. Your opening paragraph should be straight to the point. Tell customers exactly how they will benefit by purchasing your product or service. Start this paragraph with short questions that prompt the user to keep reading. Don’t beat around the bush in the paragraph and use short sentences.
Sales Letter Item #5: GIVE YOURSELF CREDIBILITY. Have you used your product and made millions? If so, state this claim, but make sure you have the evidence to back it up. A customer wants to see tangible evidence to support your claim such as an actual check or payment total.
Sales Letter Item #6: TESTIMONIALS. The purpose of a testimonial is to have other people, essentially satisfied customers, support your credibility. You can obtain testimonials by surveying past customers. Another option is to write case studies of how your product or service helped a previous customer. If your product or service is new then you can give away your product or service in exchange for a testimonial. Do not make up testimonials. Not only is this unethical, it is a poor business practice.
Sales Letter Item #7: MINI-HEADLINES. Underneath your testimonials you will insert small bullets and check marks that contain mini-headlines. Keep the mini-headlines concise and benefit driven. It is recommended to bold every other bullet for easy reading.
Sales Letter Item #8: MORE TESTIMONIALS.
If you include these 8 sales letter items then you are half way down the path to a successful sales letter. Take a moment to brainstorm headlines and you are on your way!
Both Tom Mack & Matt Bacak are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Tom Mack has sinced written about articles on various topics from Finances, Debts Loans and Free Credit Report Score. Tom Mack simplifies the mortgage modification process. Find out more about Loan Modifications and “How To Write A Killer Hardship Letter” with his popular FREE Special Report, available at: =>. Tom Mack's top article generates over 12100 views. to your Favourites.
Matt Bacak has sinced written about articles on various topics from Writing, Web Development and Advertising Guide. Matt Bacak, The Powerful Promoter and Entrepreneur Magazine e-Biz radio show host, and now a "#1 Best Selling Author" in just a few short hours, has helped thousands of clients target his specialty, opt-in mail direct marketing systems. The Powerful. Matt Bacak's top article generates over 110000 views. to your Favourites.