The restructuring of a mortgage, known as a loan modification is the process of changing the loan terms more favorable to the borrower agreement. Commonly it granted when the borrower is experiencing financial difficulties. In order to restructure a mortgage you may have to write what is called a hardship letter loan for the lender to consider it
The restructuring of a mortgage
The restructuring of mortgage loans is the evaluation of an existing loan to change it and make it more affordable for the borrower; It is a permanent change. The changes may include reducing the balance, reducing the rate or extending the mortgage term to lower the remaining payments. It allows the borrower to avoid foreclosure. The terms of a loan restructuring or modification can vary by lender.
Loan Modification Request
In order to receive consideration for restructuring the mortgage loan, the applicant should contact the lender with a phone call to start the process. The lender will ask questions related to income, financial situation and assets of the bank to help make a decision on whether or not the modification request is approved.
Before finalizing this request, the borrower generally must file a written letter describing the situation. It’s a good idea to for borrowers to seek advice from a lawyer of the family when it comes to making a loan modification, as this can be a complicated matter.
A hardship letter is a note to the lender regarding loan restructuring application. It detailed exactly why the borrower needs to change and how you will pay the house in the future. Common causes of financial difficulty include loss of employment, reduced working hours or a draft law that puts unexpected major crisis household income of the borrower.
What to Include
When writing a letter of difficulty must include the exact details of your financial problems. First, the borrower must identify the type of difficulties, such as a divorce situation, loss of employment or military service. The lender needs to know why the borrower has struggled to make payments and has every intention of complying with the terms of the new mortgage.
If the situation is temporary and the borrower believes that will change in the near future, you must provide this information as well. Finally, a hardship letter must include an itemized household budget so the lender can review your expenses compared to income.