Hardship Loan Modification
Hardship loan modification for a mortgage loan modification
takes into account the nature and extent of the hardship of
a borrower to cause to default on the loan or unable to be
able to afford the loan.
Hardship Loan modification for a mortgage loan modification takes into account the hardships associated with the borrower for
a loan modification. The associated hardships can
cause the borrower to default on the loan or be unable to afford the loan
in its existing terms. Hardships can be of different types.
Types of hardship
- Loss or reduction of income
If two spouses were working, one of the spouses has lost his/her job
or the hours or wages have been cut. For a business, the business may
have slowed down due to the economy
- ARM loans
The existing loan is an ARM loan. It will reset to a higher value and
the borrower may no longer be able to afford payments after the loan
is reset
- Interest rate reset to very high
If the ARM loan is reset and the interest rate is high, the borrower
is unable to afford the house
- Health or Injury
The borrower has some sort of a health related condition or injury
and has been unable to work and obtain income
- Change in the borrowers on the loan
Initially, there were two borrowers on the loan, one of the borrowers
either wants out or is no longer making payments
- Death of a spouse or other family member
Death of a spouse causing reduction in income and hence no longer being
able to afford the mortgage
- Other personal hardship
Other hardships like divorce, home value upside down etc.
Nature of hardship
A temporary hardship lasts for a small period of time and is either
over or about to be over.
A permanent hardship is one that will not end.
A temporary hardship is the basis of a loan modification. The lender needs
to see that the hardship is indeed temporary and the borrower has the
ability to be able to make payments going forward should assistance in
the existing loan terms be granted.
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