The hardship package required by most banks (or lenders) contains the following documents:
* The Authorization To Release Mortgage Information
* A Proposal For Reinstatement
* A Completed Financial Statement
* A Hardship Letter
* Verification (of the) Hardship
* Copies (that verify) Your Household Income
* Copies of 3 Bank Statements
* Copies of 2 Tax Returns With Supporting W-2′s
Now, will other documents be required? Probably. Almost definitely! Each lender and each situation is different, so probably yes. Which is why it is very important for you to be cooperative and available to your lender or a specialist helping you solve the problem.
So let’s explain what each one of these document groups are.
The Authorization To Release Mortgage Information
The Authorization To Release Mortgage Information is a document that you sign that gives your lender permission to speak to someone else about your loan. Without it, it is against the law for your lender to talk to anyone else about your loan. Anyone else who speaks to the lender on your behalf needs this authorization. You do not need this form if you are negotiating with the lender on your own behalf.
A Proposal For Reinstatement
The Proposal For Reinstatement is an explanation of any of the reinstatement programs the lender offers that you think you may qualify for. You or the person representing you simply tells the lender in writing what program or programs you think will give you the best chance(s) for success. You probably have a list of their programs in one of your monthly statements. Be realistic and creative–ask for what you need!
For example, let’s say that you are having trouble making your mortgage payment, but you feel that if the interest rate of your loan was 2% less–that you would be in great shape. Then in your reinstatement proposal to your lender, you would ask for a 2% interest rate reduction. Your job would be to persuade the lender why it would be in their best interest to do that.
A Completed Financial Disclosure (of Expenses)
A Completed Financial Disclosure of expenses is a document that lists all of your monthly expenses. Be accurate and take care with the expense amounts you list! Don’t go overboard; certainly don’t lie. Some lenders let you use your own forms; others require you to use theirs. Obviously the lender wants a snapshot of what your financial life looks like today. Don’t tell them your food bill is $50 a month when it is really $100. Some of these agencies input their own values for food.
It’s important that you be accurate because otherwise two bad things can happen: One, you may get trapped by a payment you can’t really afford. And two, your lender may deny your claim for being incomplete or inaccurate.
The Hardship Letter
The hardship letter explains what happened to cause you to get behind in making your monthly payment and what you did to cure the problem. From the perspective of your lender YOUR HARDSHIP IS THE REASON for them to consider your workout proposal. Hardship letter samples are ‘all over the place’ for any of you who may find writing to be a challenge. Just make sure the composition is in your voice.
Verification (of the) Hardship
Hardship Verification documents are any documents that verify your hardship was real. For example, unemployment insurance, medical bills, divorce papers or a lay-off notice are all examples of documents which verify some hardship condition.
Copies (that verify) Your Household Income
You must gather together documents that verify all your sources of income. The lender wants to see proof that you actually have enough income to afford the monthly payments of the reinstatement program you request in your reinstatement proposal. Your lender will deny your request without these documents; if you can’t prove you have the income–how can you afford the payment?
Copies of Bank Statements
Your lender wants to see 2 or 3 months of your most recent bank statements for all active accounts. They want complete copies. You can call your bank or go online to gather this information.
Copies of Tax Returns With Supporting W-2′s
Your lender wants copies of your tax returns for the past two years. If you haven’t filed them for the last year or two, simply write that on a sheet of paper and sign and submit that document to your lender.
In summary, the hardship package required by most banks or lenders consists of an Authorization To Release Mortgage Information, A Proposal For Reinstatement, A Completed Financial Disclosure (of Expenses), A Hardship Letter, Verification of the hardship, Copies (that verify) Your Household Income, Copies of your Bank Statements and Copies of two Tax Returns.
Sent: 5/30/2008 5:52:31 P.M. Pacific Daylight Time
Subj: HOUSE FIRES
House fires–please read!!!!!
Received from a friend who is in the insurance property business. It is
well worth reading.
This is one of those e-mails that if you don’t send it, rest assured
someone on your list will suffer for not reading it. The original
message was written by a lady whose brother and wife learned a hard
lesson this past week.
Their house burnt down.. nothing left but ashes. They have good
insurance so the house will be replaced and most of the contents. That
is the good news.
However, they were sick when they found out the cause of the fire.
The insurance investigator sifted through the ashes for several hours.
He had the cause of the fire traced to the master bathroom. He asked
her sister-in-law what she had plugged in the bathroom. She listed the
normal things….curling iron, blow dryer.
He kept saying to her, ‘No, this would be something that would
disintegrate at high temperatures’. Then her sister-in-law
remembered she had a Glade Plug-In, in the bathroom.
The investigator had one of those ‘Aha’ moments. He said that was the
cause of the fire. He said he has seen more house fires started with
the plug-in type room fresheners than anything else. He said the
plastic they are made from is THIN. He also said that in every case
there was nothing left to prove that it even existed. When the
investigator looked in the wall plug, the two prongs left from the
plug-in were sti ll in there.
Her sister-in -law had one of the plug-ins that had a small night light
built in it. She said she had noticed that the light would dim and then
finally go out. She would walk in to the bathroom a few hours later,
and the light would be back on again. The investigator said that the
unit was getting too hot, and would dim and go out rather than just
blow the light bulb. Once it cooled down it would come back on. That is
a warning sign
The investigator said he personally wouldn’t have any type of plug in
fragrance device anywhere in his house. He has seen too many places
that have been burned down due to them.
PLEASE PASS THIS ON TO ALL THE
PEOPLE IN YOUR ADDRESS BOOK.
NOT ONLY COULD IT SAVE SOMEONE’S HOUSE,
BUT IT COULD SAVE SOMEONE’S LIFE
Are you thinking of buying your children’s house or that of some other relative or friend–because prices are starting to make you salivate? Salivate like that wolf in those old Bugs Bunny cartoons, with a huge tongue, dripping wet, swirling all around in their mouth?
What if you could get the house you want at the price you want and the terms you want and the fee you paid was zero. Would that work for you?
Now of course you would still be paying ALL closing costs because in a short sale the bank is only concerned about its net amount–not gross amount–but you knew that, right?
But, how do I get paid? Let’s say you want a house that is an excellent buy for you at $42,000 and I negotiate it to $38,000–then I earn $4000. See how it works?
I am not a realtor. I buy houses as a principal! But I may be able to save you from having to go down into that real estate coal mine and get all that dirt on your face and dust up your nose–so to speak. I sure hope you don’t have allergies like I do.
A short sale is more of an art than a science. Most people, even realtors, don’t do them correctly, because you need two different skill-sets to complete a successful short sale. You need to be able to negotiate with the lender–and sell the property, too. Realtors obviously know how to sell real estate, but most have not been trained to negotiate with the lender.
Knowing how things usually get done, I suspect that many agents take a “quick course” probably less than 8 hours, and walk away with the mistaken belief they know how to do a short sale–but they are usually wrong. A short sale can take a long time, drag-on, frustrate you, and worst of all:
You Can Never Guarantee That A Short Sale Will Be Successful!
Just to make sure we are all on the same page with what a short sale is: a short sale is a sale of a property in which the lender accepts less than what is owed. That being said, the lender is NEVER required to accept your short sale offer! Sometimes they do; sometimes they don’t. This can lead to a conflict between the realtor and buyer.
You see the conflict, don’t you? Chances are the realtor told the buyer they could do the deal; but remember, you can never guarantee that a short sale will be successful, so if the short sale is not accepted by the lender then, how does the realtor make their buyer understand?
Also, even if the realtor is the buyer, what happens if the deal still does not go through? Is that alright with the average realtor? They did just spend their time and money, didn’t they? So how do you think an average agent feels? Do you think they are excited about doing the next short sale? And, if they are not excited about it, what do you think happens to your deal?
But why didn’t the lender accept the short sale? They may have thought the property was worth more, your short sale package was incomplete, or they may have been instructed to resell all foreclosed real estate as real estate owned (REO) property.
In summary, if you’re inexperienced at doing short sales, but you see a deal that makes you salivate and you want to buy the house at the price and terms you want–call me and let’s discuss your deal. Because, even though there is never a guarantee of success with a short sale–the only way to find romance is to take a chance.
The best way to stop foreclosure is to save All of your financial documents.
Start today, do yourself a BIG favor–or keep on doing it–Save all of your financial documents. And I do mean all of them:
* If you want to stop foreclosure
* If you want the best loan modification
* If you want the biggest short sale discount
* If you are thinking about filing a lawsuit against your lender
* If you have IRS tax issues
* If you decide to file bankruptcy
* If you need credit counseling
* If you need government assistance
I can’t stress this point enough–save ALL of your financial documents.
When I say save all of your financial documents, I mean every last one of them!
Your original loan documents: title report, loan application(s) insurance documents, settlement statements, appraisal, and documents from your realtor. I mean copies of your monthly mortgage statements, check stubs, bank statements, homeowner association (HOA) payments, tax documents, and more. I mean all documents of repairs and remodeling and repair estimates–all that financial stuff. Starting to get the idea?
Now I want to talk to you about what you and I may think of as the garbage documents. You know, all those notices pertaining to being late and foreclosure. Save every last one of those late and foreclosure notices, folks, every last annoying one.
All of this has to do with good record keeping that we should all practice, but I dare say most of us don’t. I was talking to a friend of mine the other day who has pay stubs dating back to the 1980′s…and he now has a dialing for dollars plan for those documents.
Why save those documents, especially those late notices, that once they start coming, they seem to get delivered to your mailbox, everyday? The reason is very simple. Your documents are a financial snap-shot of your life. You and your lender will never meet, but they WILL pass judgment on your life through your documents!
Even if they care about you, your documents will have to tell your story and sell your story. And the more good and factual material you have, the easier that will be.
Many of us would like to believe that there is some secret and magical way to stop foreclosure, if we only knew what it was. The fact is though, there isn’t. But if you believe in magic and miracles: start practicing good record keeping if you have not been doing so, and keep doing it, if you have, and your genie just may appear.
You should know too that you waste your money and the time of professionals without good documentation. In fact, smart professionals may refuse to serve you without it. More importantly, many lenders will deny your claim with poor or incomplete documentation.
Some big lenders are receiving between 3000-5000 telephone calls a week from people wanting to do workout programs–so we need to be clear on this point–a lender may not hesitate to deny your claim with poor or incomplete documentation.
And the way they do it is to simply put your incomplete package at the bottom of an increasingly larger growing stack. Then you run of time, your house is foreclosed on and you are forced to move.
This is one reason you may want to seriously consider hiring a professional to get you out of this mess. You will probably have only one chance to tell your story to your lender.
If you really want to save your home from foreclosure, you also need to understand that the professional working with you is under immense pressure to perform– but without the documents or poor documentation–we are dead in the water. We simply cannot provide you with the high quality service you deserve and we want to provide you with.
I am not saying give up if you don’t have good documentation. What I am saying is if you have not been doing good record keeping–for your own benefit, please start doing it from
And don’t think I don’t need to ‘practice what I preach’; I do. I have been opening my mail over the trash can, just like you. But I’m in the business of loss mitigation now–we help people save their homes–so I spend all my waking hours thinking about how to more effectively help and serve you, and I have recently discovered that this is the most simple and powerful way in which you can help yourself, help your specialist, and get what you need from your lender.
In summary, save all of your financial documents pertaining to your house–every last one of them. And save all your bank statements, monthly mortgage statements, taxes–that kind of stuff, too. Those documents are paper, like money is paper, too. So think of those documents as you would money–and you may not be far from the truth–if you find yourself, at this hour, trying to stop your foreclosure.