If you are pursuing a loan modification, deed in lieu, or a short sale you will likely need to write a Hardship Letter. A Hardship Letter is a letter written to the lender and usually is sent along with other financial documents that outline the hardship and why the lender should approve your request. This blog is intended to provide Homeowners insight in to how to write a Hardship Letter. For sample Hardship Letters and more information about how to write a Hardship Letter contact me and I will email them to you. Prior to drafting a Hardship Letter you may want to discover if you are eligible for a HAFA Short Sale, HAMP Loan Mod, or a Deed in Lieu.
The central document in the loan modification, deed in lieu, or a short sale package is the Hardship Letter. The Hardship Letter provides the homeowner with an opportunity to state their case as to why their request should be approved. The Hardship Letter should be a honest and heartfelt statement outlining the circumstances that have created the problem causing the property to no longer be affordable under the current terms. It should include these components:
- A description of the steps the homeowner has taken (used credit cards, borrowed from family, borrowed from retirement, etc…) to stay current on the mortgage.
- A brief apology for having to ask the lender to take a loss
- A clear statement indicating the homeowner has exhausted all options available to stay current on the mortgage and that the requested option is the only remaining option, other than foreclosure.
- A request of the specific option (loan modification, deed in lieu, or a short sale) you are asking to be approved.
While it is important to provide a complete picture of the hardship it is also important to avoid a letter that is excessively long. In order to get a Loss Mitigator to understand the hardship, the Loss Mitigator needs to read the letter and connect with the writer. Generally a good Hardship letter should be no more than 1 page and no less than a 1/2 of a page. In addition the letter should be:
- Single spaced
- Signed by all borrowers
- Include the loan number(s)
- Addressed to your specific lender
- Include address of the subject property
- Indicated the items attached to support your statement.
An introduction (what you are requesting) , a body (why you are making the request), and a closing (importance of the request to be approved) with a clear statement indicating all options have been exhausted and this option is the only remaining option, other than foreclosure. If possible, in the body of the Hardship Letter provide supporting facts that validate the hardship. For example:
- Date of layoff
- Amount of loss of income
- Date of divorce
- Date of death of loved one.
- How many miles you relocated.
- Date of injury
It may also be a good idea to attach supporting documents to the Hardship Letter to further validate the hardship. For example:
- Letter from employer outlining a reduction in pay or hours
- Layoff notice
- Cancellation/late notices for medical, auto, or life insurance.
- Delinquency notices from other creditors/utility providers.
- Letters from doctors regarding injury or illness
- Death certificates on Co-borrower
- Disability benefit letters
- Relocation letter
- Divorce/separation papers
- Receipt for excessive medical payment or medication
- Any additional documents that support a family hardship
Please keep in mind a genuine, honest, and heartfelt statement indicating your reason for the requested loan modification, deed in lieu, or a short sale is the most effective. Use the information found in this blog on how to write a Hardship Letter and our Free Sample Hardship Letters to help you overcome writers block and write an effective Hardship Letter however never fabricate a Hardship Letter that is not completely reflective of your individual situation or copy someone elses Hardship Letter. For Sample Hardship Letters contact me and I will email them to you or visit our office at 5079 Lone Tree Way Antioch, Ca 94531.
Disclaimer: Readers with credit, legal and tax questions are advised to see the advice of an attorney or tax professional. The information above is not to be considered legal and or tax advice.