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.
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