Writing a Hardship Letter
Understanding how to craft a hardship letter is critical when seeking leniency from a lender. And, yes, many are currently experiencing hardships. If you are currently entering into foreclosure, it is important to note that you are not alone in your situation.
This is not stated so that you feel better about the situation. It is stated as a means of pointing out that lending institutions have been inundated with many requests for leniency.
Yes, there has been an enormous volume of problems requests to stall off foreclosure received by the lenders. While these lending institutions do not approve every individual that makes such a request, they will approve those that are experiencing significant hardships. In order to ask for such special consideration, it becomes necessary to submit a letter of hardship to the mortgage issuer.
What should appear on the document:
- Your name:
- Your address:
- Your telephone number:
- Your loan identification number:
- The reason why you are writing the letter:
When drafting the letter, be sure to identify yourself clearly. Omitting clear information on the hardship letter could lead to the letter being discarded since it cannot be accurately linked to a borrower.
The body of the letter should clearly state your need for a loan modification, the reasons why you are experiencing a hardship, and a request for a meeting to discuss the situation in person.
Those that may have trouble writing such a letter could ask a
qualified home mortgage attorney
to handle the letter on their behalf. In doing this, they can be assured that the letter will be properly written and will cover all the necessary points required to achieve a positive outcome.
As the name implies, such a letter will clearly and explicitly detail your situation.In short, it will detail the fact that the borrower may be in serious financial trouble and it will detail the main reason why the individual is experiencing such problems. This letter then becomes the legal document that puts forth the request for special consideration to avoid foreclosure.
The importance of a well-written hardship document
It is very important to point out here that mortgages and foreclosures are all clearly defined under the law.
A mortgage is closed upon the signing of a contract. That contract is a legal and binding agreement that cannot be altered unless both parties agree to the alternation.
Anyone wishing to request a change in the original agreement must do so formally. In short, a document must be presented making the office request. A verbal request has no real standing under the law. An email is also a weak means of making a request to modify a document.
A typed written, explicit, detailed, and signed letter does have much more value in terms of its legal standing. It is a formal process and formality will allow the other parties to initiating the modification process.
This does not mean they will agree to anything based on the mere receipt of the hardship letter, but they can at least get the proverbial ball rolling on the process.
The hardship letter is a statement of fact.
Many erroneously assume that writing such a letter is tantamount to “begging.” This is an extremely inaccurate assessment of the purpose of the letter. A hardship request is a formal statement asking to modify the terms and agreements of a particular contract. As such, one should not look beyond the primary purpose the document for any hidden subtext.
Of course, in order to maximize the benefits of such a letter it is important that the letter is properly written. An improperly worded, unprofessional, or unclear letter may undermine the cause.
It is also important to avoid verbosity. Some individuals may feel compelled to detail their situation in a lengthy and explicit manner. The governing wisdom here is that the more detailed their letter is, the more inclined the lender will be to listen.
Again, the hardship letter is intended to service the purpose of starting the process and is not an end in and of itself. As such, brevity is best used when composing such a letter as this will have a much better impact on those that receive the letter. Also, a tight and succinct letter will be much easier to understand and will not confuse anyone reading the document.
The underlying cause of hardship
The most important element of the document is the explicit statement of the underlying cause of the hardship. Keep in mind there are only a finite number of problems that constitute a legitimate hardship. These include:
- loss of income/ salary reduction
- medical illness/ major medical expense
- natural disasters
- job relocation
- property tax increase
- childcare expenses
- death of spouse or co-borrower
- military duty
- failed business
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In short, the hardship scenario must be a serious one. Having excess cash available but earmarking it for other pursuits would probably not constitute a hardship.
Financial difficulties do not automatically mean foreclosure is inevitable. There are options available to distressed borrowers in the form of loan modifications. A hardship letter is the document that can get such a process rolling and that is why its value can never be discounted.
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Going to loan modification program from hardship letter