Even with well-meaning government intervention, it is almost impossible to refinance the mortgage on your upside down home. Here are a few tips I gleaned from a NY Times article by Lisa Provost:
First, she recommends writing the hardship letter yourself.
Second, she says not to assume the bank has a heart- it doesn’t - no matter how heart-wrenching your personal story is! Your hardship letter should be succinct and stick to the facts. For example, I lost my job, have an illness or have reduced income. Never use the fact that your home is worth less than it was when you bought it.
Thirdly, you should BRIEFLY state what steps you’ve taken to avoid defaulting on your loan, i.e. cutting household expenses or tapping into savings. If your finances are starting to improve, you should mention this since it indicates your situation is a temporary one and that you should be able to make payments in the future.
Finally, the letter should clearly state your proposal to the bank, be it interest rate reduction or a reduction in principal.
I sincerely hope this blog helps someone in need.
Fran Varcoe of RealtyQuest