A successful loan workout for a borrower in default to keep the property is dependent on the lender being able to determine the homeowner has suffered a financial hardship and will have the financial
capability to be able to keep the loan current in the future. A successful workout involving a pre-foreclosure sale or Deed In Lieu of Foreclosure will be dependent on the lender being able to determine there was a financial hardship and that foreclosure is inevitable. Most lenders will require the following documents as the minimum for considering a loan workout, and many lenders will not consider a workout until the loan has been delinquent for at least 90 days. Answers to commonly asked questions about foreclosure can be found in
our Foreclosure Discussion Forum.

Hardship Letter

This letter describes the hardship that caused the loan to go into default and describes your preferred solution to bring the loan current. The hardship should be involuntary, such as divorce, job layoff or medical reasons. If your loan is adjustable and the payments have increased to the point of unaffordability, this may be also considered an unavoidable hardship. This letter will also include your proposal for a workout and the reason you are confident the workout plan will succeed.

Paystubs

One or two current paystubs from each person occupying the property who is contributing to the payment of household expenses. The lender will use this to determine the feasibility of any repayment plan, or to determine foreclosure is inevitable.

Tax Returns

Self employed borrowers will need to provide at least the last year tax return and preferably the last two years tax returns along with a current profit and loss statement. Many self employed borrowers don’t receive paystubs, the lender will use the tax returns to determine income levels.

Financial Statement

A statement outlining all of your income, assets and liabilities. This statement provides a snapshot of your financial situation allowing the lender to determine the probability of the economic hardship being overcome. Include all of your expenses, including discretionary spending.

One key thing to remember if you are attempting to complete a workout without outside assistance is to submit ALL of your paperwork together as a package and be sure to keep copies of everything. Your lender needs all of the information to be able to make a determination of which type of workout may be appropriate and it is possible you may have to re-submit paperwork. Lenders are extremely overburdened and files are sometimes misplaced.