Effective Hardship Letter To Stop Foreclosure
When applying for a loan modification, short sale or deed in lieu of foreclosure which are collectively referred to as forms of loss mitigation at that time writing a hardship letter will be one of the requirements in some cases for the homeowners. While in other occasions the homeowners will just need to fill out a hardship affidavit. Basically, the hardship letter is part of the loss mitigation application process and is something that homeowners should provide along with pay receipts, tax returns, a financial statement, bank statements and all other information that will be requested by the lender of the homeowner. The hardship letter gives a clear picture of the financial situation of the homeowner to the lender and also explains the circumstances that led to homeowners’ financial difficulties. A hardship letter to stop the foreclosure should contain specific information and give a reason to the lender to stop the foreclosure. Homeowners should not appeal the humanity of their lender because lenders are the business so homeowners will have more luck if they appeal desire of their lender to make money. Writing a letter to stop the foreclosure the homeowners should outline their financial situation and give a reason to the lender to work with you and try to keep it brief. Homeowners should explain in the hardship letter that why they are in financial distress and their capacity to resolve the situation. There are several reasons for writing a hardship letter, but the most common reason are for the purposes of requesting a loan modification or short sale to avoid foreclosure. In fact, the hardship letter or hardship affidavit that is written by the homeowner is required in the loan modification process even if homeowners have a foreclosure attorney representing them. When writing a hardship letter for a loan modification it should keep in mind that lenders want to know why homeowners have fallen behind with their mortgage payments. Their explanation should be clear, honest, and contain just the right amount of detail.
- What is a hardship?
A hardship is a circumstance that is beyond the control of homeowners that resulted in a situation where they can no longer afford to make their current mortgage payments. Some of the common hardships include,
- Job loss or a reduction in pay
- Illness of homeowner or family member
- Medical expenses
- Divorce or separation
- Adjustable interest rate reset
- Military service, and
- Natural disaster.
- What should be included in a hardship letter?
Many people make the mistake of spending very little time thinking about and drafting their hardship letter or simply they copy a sample letter off the Internet. The best hardship letters do not use a template or use templates only as a starting point but also include personal, honest information. The main purpose of the hardship letter is to explain to the lender how you got into your current situation and how they can help you avoid foreclosure. Here are some of the common guidelines that how homeowners can write a hardship letter that gets their point across and gets then the best loan modification results possible.
- Keep it concise: –
A typical lender commonly spends less than five minutes reading a hardship letter. So it should keep to a single page in case of longer they might not read the entire letter. All unnecessary details should be eliminated and kept only those that are relevant to the homeowners case. The foreclosure attorney of homeowners can help them tighten up the wording.
- Make a specific request: –
A hardship letter should Start by stating the purpose of the letter whether it is a loan modification or a short sale so the lender knows what homeowners want. It should say something like “I need to restructure my mortgage and obtain a lower, fixed interest rate…,” in a way that force them to find out why.
- Explain the hardships: –
First of all it should make sure that the hardship qualifies as a financial hardship. Homeowners must convince their lender they have no other means of mortgage assistance and that they will stay on track if they grant their request. Financial hardship is typically a loss of income or major expenses that were unexpected or beyond the homeowners’ control.
- HAMP defined list of qualifying hardships should see: –
Basically, this list includes some of the most common examples but is by no means all-inclusive. Each lender has its own standards and the purpose of the letter is to give them a personal look into the situation of homeowners. Once homeowners have established their hardship then details should provide that will strengthen their case. Make sure to tell them how they got into the situation and why it was out of their control.
- Restate your request: –
The homeowners should end their letter by summarizing their purpose. The previous paragraphs of the letter will have already explained that it is the only way to prevent foreclosure. Homeowners should make it clear that they will maintain their regular payments once the loan has been modified and reinstated.