Hardship letter info

One of the items your lender or servicer will ask for during the short sale process is a hardship letter. A hardship letter is a written explanation as to what “event” has caused you to fall behind or be at risk for immanent default on your mortgage.

Escape_your_mortgageThis letter acts much like an outline or biography of your current issues that are negatively affecting your ability to meet your financial obligations and that are preventing you from selling your home.

Now, we do not suggest that you write a book because most likely it will not get the attention of an over worked, $12 an hour loss mitigation employee. Keep it short and to the point. Usually 1or 2 pages is more than enough to get your point across.

Here is an example some hardships that we have seen lenders consider favorably during the short sale process:

  • Adjustable Rate Mortgage Reset-Payment Shock
  • Illness
  • Loss of Job
  • Reduced Income (reduced/eliminated bonus, overtime, reduced hours, etc)
  • Failed Business
  • Job Relocation
  • Death of Spouse or Co-Borrower
  • Death
  • Incarceration
  • Divorce
  • Marital Separation
  • Military Duty
  • Medical/Health issues
  • Damage to Property (natural disaster or unnatural)
  • Other (call us to discuss)

Now that you understand what your lender or servicer is looking for, it’s time to sit down and write a hardship letter. I made it easy for you by giving you a couple templates below that you can use as a boiler plate for your own letter. Make sure you make it unique to your situation. And we always suggest that it be a handwritten letter.

Remember that your hardship letter is only one piece of the short sale process, but key in helping you avoid foreclosure. You will still need to jump over quite a few hurdles with your lender before they will approve a short sale.

Example Hardship Letter:

Name: (Your Name)

Address: (Your Address)

Lender Name: (Your Lender)

Loan #: (your Loan #)

To Whom It May Concern:

I am writing this letter to explain my unfortunate set of circumstances that have caused us to become delinquent on our mortgage. We have done everything in our power to make ends meet but unfortunately we have fallen short and would like you to consider approving us for a short sale of our home.

The main reason that caused us to be late is (insert reason here and don’t be too lengthy and long winded) Soon after being late and our income not being nearly enough, we have fallen further and further behind. Now, it’s to the point where we cannot afford to pay what is owed to (lender). At this time we have exhausted all of our income and resources so we are turning to you for help.

(The approximate date of hardship and we believe that our situation is Permanent.)

We truly hope that you will consider working with us and we are anxious to get this settled so we all can move on.

Sincerely and Respectfully,

Borrower’s Signature


Co-Borrower’s Signature


EXAMPLE  Hardship Letter 2
To: Countrywide Mortgage account #

Re: Short Sale Request

Due to the recent adjustment to the mortgage I currently have with your company, I am finding it very difficult to afford the new payment. I have a 3 year fixed rate which is now adjustable and is schedule to adjust again in Feb. 2014.

Considering my current income, there will be no way I can afford the increased payments. Hopefully you will allow us to complete a short sale on our home and avoid foreclosure.

My mortgage was originally written by another company and bought by Countrywide. The original mortgage terms were terrible but it was the only loan I was qualified for at the time. I was assured that refinancing would be no problem but that turned out not to be true due to the downturn of the housing industry.

The main problem is that my property is now worth about 15-20% less than what I paid for it which is preventing me from being able to sell or refinance.

I believe this addresses the situation I currently find myself in along with many other homeowners. Attached is our financial documentation showing our current income and expenses.

Thanks you for your time and consideration.

The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney and/or CPA to obtain advice with respect to any particular issue or problem.

Thanks for reading and feel free to call with any questions…Steve Jackson


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Real Time Web Analytics