Factors to Consider When Writing a Sample Hardship Letter
A hardship letter is a document that explains why you are unable to pay your mortgage in an attempt to prevent a foreclosure. The bank may allow you to stay in your house at your present payment level in case your situation is unchanged. Cases of illness, loss of employment or reduced income will make you qualify for hardship. The bank might modify your current mortgage to reduce the interest or even sell your house in a short sale in case you are unable to pay your mortgage. It is necessary for you to let the bank know of all your hardships in your letter.
It is quite hard to put down your issues on paper. The letter should never include statements of how you think your life is going to improve. If you show the bank that there is some hope of your situation improving, they will deny you the loan modification or short sale that you are requesting for. The bank needs to know that you have plans of repaying the loan once your financial status improves. Sometimes it is necessary for you to describe your loss of income using numbers and percentages. In case you are borrowing money, tell the bank the amount and the source. You will only receive a loan modification if the bank sees that your situation is dire. Here are some of the factors you should consider when writing a hardship letter.
Your letter should never contain an obvious story. Your lender will never be convinced if you tell them your house value is less than your mortgage value. The letter should contain explanations on how your financial situation changed from the time you took the mortgage. In case the company you are working for is relocating and your job is at risk if you are unable to sell your home and move, ensure you document this when writing the letter. In case your mortgage is adjustable, you can use the increasing interest rates as a factor.
Avoid leaving out any information when writing down the letter. Showing your lender that you are in a terrible financial crisis should be your main goal. Ensure that you sound needy in the letter. Assume you are talking directly to the banker when writing the letter. You can consider consulting an attorney to enlighten you on the options available. There could be other options for you depending on your hardship other than loan modification and short sale.
Make sure that you avoid prioritizing loan modification or short sale. It is advisable to show the bank that you tried other ways of resolving your financial problems before coming to them. In an instance where you have lost your job, inform your lender about your efforts to find a new job.