Mortgage Loan Modification

Preparation Of The Financial Hardship Memorandum

Hi, I’m Nevada Foreclosure Consultant Damian Falcone.  This is part 3 of the Mortgage loan modification video series.

In this episode we’ll be talking about the preparation of the financial Hardship Memorandum that is required in most mortgage loan modifications and can be helpful even when not required. 

This is Get Modified! Your source for mortgage loan modification and foreclosure prevention information. As always, for even more information, go to www.falconcreditmanagement.com

A standard initial component of most mortgage loan modification applications is a Financial Hardship Memorandum or Letter. 

Your heading should include your name; property address; and mortgage account #.

Your opening paragraph should state what Foreclosure Prevention tool or tools you would like to use – A complete list can be seen in our mortgage loan modification guide but a couple examples could be a: Mortgage loan modification; Special Forbearance; or a Repayment Plan.

Your 2nd paragraph should include and describe your hardship. You should be able to display an unavoidable increase in expenses or an involuntary reduction in income.

Examples recognized by banks as common circumstances that result in an involuntary reduction in income are:  A Loss of job; Mandatory reduction in hours or wage rate; under-employment after loss of a previous job; death of a borrower or family member; a decline in business earnings of a business owner; Permanent or short-term disability; serious illness of a household member; or divorce.

Examples of Voluntary reductions in income that may not be considered a Financial Hardship are:  Normal Seasonal Layoffs; a Voluntary decrease in hours; Quitting a job without a valid reason; or Leaving a job to stay home and care for children when no documentation is provided regarding the lack of available affordable child care.

Examples recognized by banks as common circumstances that result in an unavoidable increase in expenses are:  disability or illness,  increase in uninsured major medical expenses; legal problems or litigation, being a victim of a natural or man-made disaster that damages your property or your life; and unavoidable child care expenses.

Your 3^rd paragraph should include your financial information, whether your hardship is temporary or permanent and if you have any money to put towards your delinquency if one exists.

Your 4^th paragraph is your opportunity to describe your complete plan.  You should include the dates and amounts of payments from the present day until the mortgage is satisfied.  Finish this paragraph by saying what is motivating you to make sure you succeed in making the proposed payments.

In your final paragraph I recommend you let the bank know that this issue is a priority by informing them what methods and times you are available to be contacted.

These were the basic components of a financial hardship letter.  I typically incorporate a lender benefit analysis and client benefit analysis that corresponds to the financials that accompany the mortgage loan modification application but those are not necessary.

You now have what’s necessary to write your financial hardship letter.  I’m Damian Falcone and this is Get Modified.