The vast majority of people behind on their mortgage just want a chance to get caught up and back on track. You simply want the collection phone calls to stop and things to get back to normal. You want to be able to sleep at night without worrying about losing your house or whether your friends or neighbors are going to find out you’re behind on your mortgage.
But sometimes, unfortunately, that’s just not possible!
As much as we hate to admit it, not everyone is going to be able to stay in their home. Why this is the case has been the subject of much discussion in the mortgage and banking industry as well as on Capitol Hill, but in the end, “why” doesn’t matter. We simply must accept the fact that it’s the truth.
What you lender is looking for
So if not everyone’s home can be saved, how do you know if yours can?
It’s actually pretty straight forward because your lender looks at the situation from a strictly financial perspective. And when you’re in the evaluation stage of deciding whether to stay and fight to save your home or not, you should too. I know it’s hard to detach yourself from the years of family memories and the security that owning your own home provides, but you have to try as best you can. Start by asking yourself these four questions.
Have you filed bankruptcy?
If you have filed bankruptcy to try to delay the foreclosure, your lender will not be legally able to negotiate with you about your loan until:
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You ask to have your case dismissed by the judge,
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The judge removes your mortgage from the protection of the automatic stay, or
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Your bankruptcy is discharged
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 to come in for the foreseeable future. They prefer a job, of course, but if you have a rich uncle that’s willing to put up the money, they’ll take that too.
Is your income enough?
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.
Final considerations
Do not inflate or deflate the information in your hardship package to make it seem more appealing. Your lender has “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.
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I invite you to post a comment below and tell the comunity what you’re thinking. Feel free to ask a question if I was unclear about anything too.
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Tags: bankruptcy, budget, counseling, hardship, hardship letter, lender mediation, lender negotiation, loss mitigation, tips, workout plan
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