1. Payment Increase
Your mortgage payment has increased substantially from one month to the other. It was a shock to realize that your payments would adjust to the amount that they have reached, or, if you did realize they would, you could not reasonably foresee the catastrophic economic effects of the mortgage crisis on the economy. Another devastating reality is that your home value has fallen so drastically, it has diminished your options, such as refinancing the loan. Ramifications from this situation have caused severe economic depression in your business community, and due to the real estate collapse and its far reaching effects on lending, it has left you financially unable to recover.
2. Job Loss/Layoffs/Pay Reductions
Be sure to include your spouse and/or any person who normally contributes to your monthly household income. Review your pay stubs and hours worked. Gather any and all memos or notices received from your employer detailing your layoff or reduction in pay. Carefully note income declines over the last 1-2 years, and note the events which caused it, and the effects this has had on your economic situation and family.
3. Underemployment
Recently obtained employment pays you significantly less than your recent job. The economic down turn has had a serious impact on the current salary your new employer is willing to pay you. If you owned your own business, and suffered a significant loss of revenue, or lost your business all together, make certain you explain the situation to the Bank in great detail and have documentation readily available in case they request it. It is important that you reassure the bank that although you have lost a substantial amount of revenue or lost your business, you have the ability to reasonably sustain a regular monthly payment of a lower dollar amount.
4. Declining Business or Revenue
Sales are down. If you own your own business, are self employed, work for commissions, bonuses or tips, or earn income in any way other than as a company employee receiving a regular paycheck, and your income has decreased. A detailed profit and loss report prepared by a certified accountant will help you detail your economic losses to the Bank.
5. Illness/Injury
There are undisclosed yet obvious stress related effects of financial stress: clinical depression, marital estrangement, and increased alcohol and drug dependency and abuse. People can’t cope, so they start checking out. Subtly, these problems wipe out the very tools they need to survive financially. The physical, emotional, and psychological strain on people due to the financial crisis has worsened under the mortgage crisis. This has also contributed to higher medical expenses, attributing to the inability to pay their mortgages. A sick loved one, a death in the family, or a child with special needs can also take a financial tool on the family. Note that the Bank will take all of these circumstances into consideration, but ultimately your Lender wants a sense of security that you have a steady income to support a loan modification despite your obstacles.
6. Divorce/Separation
Divorce is a financial wipeout. Most married couples experience financial strain – rich or poor – it is common. In these times, two heads are definitely better than one. If there is any way you can postpone divorce, swallow your pride and hang in there. Couples in divorce nowadays are faced with a rude awakening – their homes are worth less than their mortgages. For many, if not most , divorce now is a splitting of debts – not of assets. Financial survival dictates that couples stay together if possible. Divorce can mean financial suicide. Two incomes can mean having a home vs. not having a home. Nevertheless, if you have been divorces or separated, you have a definite financial hardship. Be prepared to provide the Bank a copy of your divorce settlement.
7. Disaster
Fires, auto accidents, floods – any act of God, whether insured, uninsured, or partially insured. Setbacks to your cash-flow, or ability to generate cash flow are valid hardships.
Law Office of Ray Garcia, P.A.
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