Lately I've been asked by a few people to assist them with writting a hardship letter. Here is an example...

A financial hardship letter for mortgage companies or banks is a letter you send to your financial institution explaining why you are no longer able to make the payments on your house and indicate exactly what happened to cause your payments to fall behind.

Sample Seller’s Hardship Letter


To Whom It May Concern:


This is a very difficult thing to write. I have always been able to pay my debts in the past and am truly sorry that I cannot do so now.

I lost my job as a manager for a large home improvement company. I have been unemployedfor six months. I have been receiving unemployment benefits. However, my unemploymentcheck replaces about one quarter of my previous income. My wife is a stay‐at‐home momresponsible for our four children. Wehave both been looking for employment. We haveexhausted our savings. Our credit cards are maxed out and we are in the process of filing for divorce.

We can no longer afford to make the $1,800 monthly mortgage payment on our home. We arecurrently five months behind and see no way to make up the $9,000 in back payments. Our realestate taxes are also due and we have no way to pay those either.

We have agreed to sell our property for $375,000. It has been on the market for over 60 daysand this is the only offer we have received. We want to avoid a foreclosure sale that will further damage our credit. We respectfully request that you consider this offer and work with our agent to negotiate a short‐sale transaction.

We have exhausted all of our options and the only next step is letting the property go to foreclosure.

Sincerely,




Daniel and Sandy Smith

SAME ALERT!

Scam Alert
Callers Attempting to Obtain Social Security Numbers

Some RAR Members have reported receiving suspicious phone calls claiming that they have missed their scheduled jury duty. As a result, it is then requested that the member provide their social security number. Please be aware of this scam and be advised that you should never provide your social security number to any individuals that you do not know.

FOUR TIPS TO ENSURE A SMOOTH REAL ESTATE TRANSACTION

RISMEDIA, December 18, 2010—As a real estate agent, it’s important to be aware of the pitfalls of home financing in order to help your sales come together and stay together. Typically, during the sales process, you may be your client’s first point of contact for any and all situations that arise. As such, if you are able to work in conjunction with a knowledgeable mortgage professional and help educate your client along the way, this extra knowledge may eliminate potential issues and bring you and your client to a successful close.

Since there have been a number of industry regulation changes in the mortgage industry in the past few years, it’s important to keep these tips in mind:

1. You don’t want to waste your time showing homes to someone who can’t buy them. Have your client check their credit score in advance to be sure they meet the minimum credit standards to qualify for a mortgage. A reputable mortgage company can run the necessary credit report and recommend a credit repair company should there be credit concerns. You can also suggest to your client they request a preapproval letter from your mortgage partner. This will save you time and money if you have the conversation before you start the process of showing them homes.

2. Advise your client to obtain a preapproval. The information needed includes, but is not limited to the following; W2s for the past two years, 30 days of consecutive pay stubs, all pages of the two most recent statements for checking, savings and all investment accounts, a copy of the signed P&S or Warranty Deed Agreement. Your mortgage partner will let your client know this, but it’s important you know in case it comes up in advance.

3. Prior to home buying, it’s important that your client set aside the proper amount of cash for closing. They should keep current on all loan payments, should not make any large purchases on credit, or sign or co-sign on any other loans. If there is any change in employment, borrowers should make all parties in the process aware. These things can affect your client’s credit as well as their ability to qualify for a mortgage.

4. Your client should be prepared to pay closing costs unless they qualify for a no-points, no-closing cost loan. This is important to mention to them because you don’t want them to fall short and not be able to secure financing at all or have delays when it is time to close.

While a good mortgage partner will be able to handle the specific mortgage related issues that come up, ensuring this process goes smoothly is paramount to getting the house closed, and being educated is your first line of defense.

Avoid Foreclosure - Do Short Sale - Work for Next Home Homeownership and Cheer Up!

Hi,

Too many people are in trouble for mortgage payments! If you are one of such many people, turn the trouble into an opportunity to unload the heavy burdens of loans on your back, be it your primary residence or your rental properties that are giving you nightmares. A short sale is 'debt settlement' with lender(s), whether it is little or large. Loan Modification may be feasible. Give me a call, I'd love the opportunity to talk with you or contact me via e-mail and I'd be happy to corresponds with you over the net. I have plenty of experience by now to help such people in trouble to reduce their stress levels and help them solve their problems.

Best Regards,

Tracy Buchanan, ABR, SFR
Real Estate Agent
Long & Foster Realtors
tracy.buchanan@longandfoster.com
www.realestatewithtracy.net
804-739-6000

A T T A C K

I was in my weekly sales meeting today and my Broker shared something that I thought was great, so I'm going to share it with you guys:

HOW TO STAY CALM & PRODUCTIVE UNDER PRESSURE:

ATTACK

A Accept Circumstances as they are. Don't make things better than they are, and don't make them worse. Have the courage to face reality.

T Take responsibility. Take ownership of your behavior and the consequent results.

T Take action-DO SOMETHING-Commit to do different things...not doing things differently.

A Acknowledge progress-create a culture of celebration for you. Focus on incremental sucesses.

C Commit to learning-The more you know, the more you'll be known...be informed and then inform others. As Warren Buffett says,"the more you learn, the more you earn."

K Kindle means to give new life to... kindle relationships (new and old) with every interaction.

Tracy Buchanan: Debt to Income Ratio (DTI) - Modificaitons

Tracy Buchanan: Debt to Income Ratio (DTI) - Modificaitons: "Home Affordable Foreclosure Alternatives Program (HAFA) is a part of the making homes affordable program. We here a lot of negative talk abo..."

Debt to Income Ratio (DTI) - Modificaitons

Home Affordable Foreclosure Alternatives Program (HAFA) is a part of the making homes affordable program. We here a lot of negative talk about modifications because the process and be long and drawn out for months. But, I gotta tell ya, If you just hang in there, in the end, it's all worth it.

What I want to talk about today is Calculating your Front-End and Back-End Debt to Income Ratio (DTI). I seen this time and time again when an applicants DTI is either too high or too low and the application be declined. So, to understand DTI, your house payment or PITIA (principle, interest, taxes, insurance, association fees) cannot exceed 31 percent of your gross monthly income. The DTI comes in two scenarios:

Front-end DTI ratio is based on your house payment. (Under the Obama plan, the front-end DTI target of 31 percent accounts only for the first mortgage. If you have other loans against your home, such as a second mortgage or home equity line of credit, you account for those separately as part of your back-end DTI.)

Back-end DTI ratio is based on all monthly debt payments combined, including your house payment, credit cart payments, payment on auto loans, etc.
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To calculate your front end DTI ratio, divide your house payment by your gross monthly household income:

House payment/Gross Monthly Household Income = Front-End DTI Ratio

(If you pay property taxes, insurance, and homeowner association fees separately, then add them all up, divide by 12 months, and add the result to your monthly household income)

Note: Private Mortgage Insurance (PMI) payments fall outside this calculation under President Obama's guidelines.
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To calculate your back end DTI ratio, add up all your monthly debt payments, including:

~House payment or PITIA, as discussed in the previous section
~Any payments on second mortgages, home-equity loans, or home-equity lines
~Credit card payments
~Auto loan or lease payments
~Alimony
~Other payment on credit accounts or loans

Now, divide your total monthly debt payments by your total gross monthly household income:

Monthly Debt Payments/Gross Monthly Household Income=Back-End DTI Ratio

Keep in mind that only lenders, investors, and servicers who choose to participate in this program are bond by its guidelines and that the guidelines may change over time. Your lender may have its own DTI ratio targets and limitations. So, I suggest that when calling your loan servicer to inquire about a loan modification ask what are their DTI Ratio guidelines, then do what you have to do to make your finances fit their qualifications.