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Hardship letter: What is it and how to write it?

Author: Jessica Bennet
Community Mentor
Ask Jessica
Posted on: 12th Feb, 2008 11:07am
If you've fallen behind on your mortgage and need a workout from the lender, you should send them a hardship letter. A financial hardship letter is a letter that explains why you're in default, what you have done in order to correct the default, and the workout plan you are interested in.

What a hardship letter should include ...


If you are trying to get a workout from your lender, you should include the following in your hardship letter:
  1. Your contact information including your name, address, and account number.
  2. Mention what kind of hardship you're experiencing and the possible reasons for it.
  3. State when the hardship began.
  4. Give a brief overview of your income and expenses. Tell the lender that you're
    expecting a change in your income. Also inform the lender about any money you have saved to compensate for the default.
  5. Give a brief explanation of the workout plan you are interested in and state the reasons why you think it may work for you.
  6. Include how your credit counselor (if you have one to help you negotiate) can be contacted.

Apart from the above, while writing a real estate hardship letter you should provide a statement of your income, expenses, and financial statements to prove your
assets and liabilities. The type of information you should include are tax returns for the previous years, current pay stubs, etc. If you're trying to sell your home then you'll have to provide a copy of the realtor agreement along with the hardship letter. To get an idea how to write such a letter, check out a sample hardship letter.

Types of hardship that the lender may accept...


Here's a list of reasons why your hardship letter may be accepted by lenders.
  1. Loss of employment
  2. Medical problems that prevented you from working
  3. Reduction in salary
  4. You may be a single parent with a low income and you are not receiving child support
  5. You're a victim of some disaster
  6. Death of spouse or co-borrower
  7. Marital separation or divorce

Types of hardship lenders may not accept...


Your hardship letter may be rejected due to the following reasons:
  1. You're a student and cannot pay off the mortgage
  2. You're going through a divorce
  3. Your spouse has threatened to file bankruptcy

Usually mortgage lenders won't consider a workout plan such as forbearance, loan modification, short sale or foreclosure or a short sale without a proper explanation of your hardship. So, while writing a real estate hardship letter, you should provide a factual explanation of your financial situation. The hardship letter shouldn't criticize the lender or any other party involved in the mortgage transaction. It should simply state why you cannot follow the terms of the mortgage agreement along with a request for a workout plan.
Posted on: 12th Feb, 2008 11:07 am
my mortgage is with chase and i have ask for a loan mdification. i have to submitt a hardship letter and i need help writing it. i can not afford the payment as it is because of health problems. my income is much lower now and i am on disability. i can't refinance because i don't qualify. i am not currently latebut i don't know if i can make march's payment. they told me to continue to "make the payments" and that this could take up to 90 days. i don't know how i am going to make the payments and i don't want to be late. what do i need to include to make sure this letter gets me the rate reduction that i need?
Hi stigmong!

Welcome to forums!

The lender will stop the modification of the loan if you file bankruptcy. As per the court orders, the lender will not be able to do anything with your account as you are in bankruptcy.

Feel free to ask if you've further queries.

Sussane
Posted on: 23rd Mar, 2010 11:29 pm
After you get your loan modified. Can you file for bankrupcy? And how long do you have to wait to file?
Posted on: 25th Mar, 2010 05:31 am
Hi stigmond,

You will be able to file bankruptcy after getting a modification. I haven't heard of any such time period you need to wait after getting a loan modification and then file bankruptcy.

Thanks
Posted on: 26th Mar, 2010 12:44 am
I moved from the property mentioned for work and was upside down as most people. So I tried to sell no luck I then rented it out for a year still losing about 600 month. I tried refin with my mortgage co citibank and was denied due to being upside down. So I did not renew the lease wrote a hardship letter put the property up for sale for what I owed and was told to drop the price every week to show I was making an effort so keep dropping and dropping etc... until finally 1 offer then 3 came in and the citibank excepted the highest my realtor and lawyer were paid from the settlement. I missed Aug- Feb payments and the citibank showed my balance paid in full closed on all credit reports and told my lawyer that they are going to write off the difference. So my credit score dropped from like 780 to around 680 during March. I closed on the place in March and April 1st my credit score went up 50 points I was overjoyed. Does this mean it will keep going up all my other finances are never late and I have no credit card balances so will it drop again from this or is the worse over? Also a short sale as I have read does not show on a credit report. Does this mean (not that I would) I can purchase another property? Did I get lucky I documented everything and sent paperwork to Citibank and even tried to refin through them is this a good sign? thanks
Posted on: 17th Apr, 2010 09:11 pm
Hi Guest,

If you keep on making payments in regards to your other dues on time, it will definitely have a positive affect on your credit report. Also with time, the negative items will have minimal affects on your score. As far as purchasing another property is concerned, you will have to wait for 2-3 years after the short sale to get a home loan. Prior to that, lenders will not be ready to give you a mortgage.

Take care.
Posted on: 19th Apr, 2010 02:07 am
i was denied hamp bc although i met the criteria bc of disability i was told not all documents were received although i sent in repetitively.i also was told the trial payments that i was approved for were not all taken even though they had my banking info with acct and routing number and they never sent me correspondence that i had to contact them every mo to give ok although they told me it would continue for automatic removal for every mo. i did not check every mo as i had it in a bank just for the mortgage and i was hospitalized for some of the time. what can i do?what mort surplus do u need for a regular modification
Posted on: 10th Jun, 2010 09:13 am
Hi uwet!

Welcome to forums!

The lender will agree to your loan modification request depending upon your present financial situation. You will have to convince the lender for the same. Unless the lender is convinced about your situation, it will be difficult for you to get a modification. If you're unable to negotiate for a modification, you can get in touch with an attorney and take his help in this matter.

Feel free to ask if you've further queries.

Sussane
Posted on: 10th Jun, 2010 11:58 pm
Jessica, I've been patiently waiting on a short sale approval for six 3/4 months. A BPO has been completed and one of two mortgages have even been sold to another co within the six months. We just learned that the seller has been paying their mortgage the entire time and has only missed one payment June 2010. Will mortgage co approve a short sale after missing only one month or am I in this for four to six more months?
Posted on: 19th Jun, 2010 10:06 am
Hi jaenabysmeme,

Your query has been replied to in the given page:
http://www.mortgagefit.com/annoucements/about39978.html

Take a look at it. Hope it helps you.
Posted on: 21st Jun, 2010 01:18 am
We have a mortgage with BOA and our payments will double in a month. We want to modify, but I am also in the process of filing for bankruptcy (for a business which unfortunately didn't transpire). The bankruptcy will be filed only with me and not with my wife. I recently found a job but the payments will be too high. Do we have an opportunity to qualify for a loan mod if I'm filing for bankruptcy? Thank you for your time.
Posted on: 23rd Aug, 2010 10:45 pm
how much should a mortgage modification cost with professional help?
Posted on: 01st Sep, 2010 06:34 am
hi!

welcome to forums!

to guest,

if you're filing bankruptcy, then the lender may not offer you a loan modification unless you're discharged of the filing. nevertheless, you should contact your lender to find out if he can help you in this regard as you're not including the property and the mortgage in your bankruptcy filing.

to gjl,

the fees may vary from one modification company to another. however, the modification company will not be able to charge you any fees upfront.

feel free to ask if you've further queries.

sussane
Posted on: 02nd Sep, 2010 12:55 am
The house next to mine( same model) is selling for 50% of the amount I pd for mine. Actually I still owe $210K and the builder is sellling his for $160K. I can't walk away from my house because $140k have already been pd. Do you think I have a chance offering the bank for a pd out settlement?
Posted on: 30th Oct, 2010 05:49 pm
How many missed house payments before a bank will start for cloursure on your home
Posted on: 09th Feb, 2011 11:52 am
How many missed house payments before a bank will start for cloursure on your home
Posted on: 09th Feb, 2011 11:52 am
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