Hardship Letter Mortgage Modification Program

Hardship Letter

Mortgage modification program

Dear Sirs and Mesdames:

never thought I would have to write a hardship letter, yet here I am, in the very situation which every hard-working person dreads.

What kind of situation am I in? Due to the recent adjustment to the mortgage I currently have with your company, I am finding it very difficult to afford the new payments. I had a 30-year fixed rate loan, which I now find is actually an adjustable rate loan. I say I had a 30-year fixed rate because that was what I was led to believe by your agent, when I refinanced my house with your company. The agent said I was receiving a 5.5% annual percentage rate (APR), interest-only loan and second mortgage of 9.9% with a fixed 7.5% thirty-year rate.

I was shocked to find out that my loan is now adjusted to over 9%.

Considering my current income, there is no way I can afford the resulting increased payments, come May of 2008. Surely there is some way to renegotiate the terms of my current mortgage in order to avoid default and help stop foreclosure on my home. I am sure that you do not wish there to be a default on my payments and would wish to continue receiving payments on this house. That is why I am respectfully requesting that you consider the following plan: Would it be possible to convert the current adjustable rate mortgage to a fixed rate mortgage? I will be happy to talk with you about how this might be accomplished and am willing to make some adjustments to my current payments in order to let this happen.

If this is not possible, would you consider allowing the next rate change to be postponed for a short while so that I might be allowed to refinance? Any alternative solutions to defaulting and foreclosure would be greatly appreciated. For more than 4 years I have had no problem making the payments at the current rate and I wish to continue paying on the house. As I mentioned, the present terms of the mortgage are not the terms which were given to me by the agent and which he claimed were written into the mortgage. They are also not what the first page of your agreement indicates. A misstatement in our contract begs for renegotiation or, if this fails, interpretation by the courts as to whether our contract is valid. I will certainly consult a real estate attorney if all else fails.

I am seeking refinancing to pay for this loan; however I am finding it difficult, as my credit is not what it once was. I have had to take a 15% cut in pay in order to continue working and, while I have continued to make the mortgage payments with my reduced income, other areas of my life have suffered from the scaling down of available monies. I have incurred expenses which have increased my debts, such as rising interest rates and penalties, emergency medical expenses and still have student loans to pay for, as I seek to improve my lot. As a result, my credit score has decreased from 740 to 501. Exacerbating the financial problems I am facing, I have just discovered that the property which is mortgaged is worth 5-10% less than the amount paid for it, which would make it difficult to refinance. However, I wish to point out that I have continued to make my payments in spite of my troubles, and therefore deserve the benefit of your trust.

While researching financial possibilities on the internet, I came across Fannie Mae Announcement #06-18 (Oct. 4th 2006) regarding the servicing of Conventional Mortgage Modifications. I believe this information, which I am sure you are familiar with, addresses the situation in which we currently find ourselves and may provide the solution to the problem.