Because of its importance to the financial stability and well-being of the country the financial hardship letter is fast becoming the most important document in the country since the Declaration of Independence. In essence, the hardship letter lets the lender know that the homeowner is on track to pay for his or her home but just needs a refinancing to achieve this goal.
The weakening real estate market not only began a steep decline in the price of property, it slashed from the other side by both restricting the capital that a lending institution can give out and placing a glut of unsold homes on the market. This is because many of the homes sold in the past few years were marketed with “teaser rates,” loan percentages that went as low as zero to get buyers in the door. Once the low-interest period ended the real costs became evident. Many people were not prepared to pay for as much as a $1,000 a month more on their mortgage. Luckily there is a new program in place to help these homeowners and the most important part of this process is writing a financial hardship letter.
Losing one’s home doesn’t happen in a week or even a month. In many cases it’s a domino effect beginning with the “teaser rates” jumping up five or more percentage points and then one or more of the household’s income earners losing a job. When you learn how to write a hardship letter this will explain your circumstances to the lender and show good faith on your part. This important letter will also let the lender know how to assist you and what you will do to help the situation.
The most vital part in getting a federally-sponsored loan modification is to get your hardship letter to the lender’s agent before the home is foreclosed. Writing the letter is not very difficult but getting all the pertinent information in the letter requires that the borrower have all the key ingredients. Loss mitigators, the lenders’ representatives, usually have large case loads to review, so if there are parts missing then the application has to be returned and it might take another month or more before it gets reviewed again.
This letter is just part of the package for loan modification. However, the job of a loss mitigator is not to show you how to write a financial hardship letter. This is up to you and it is much too important to be left to chance.
Get the right information and learn how to write a hardship letter that gets results by reviewing the sample hardship letter below.
Hardship Letter Sample
Type of Letter: Loan Modification
1st/2nd/Heloc: 1st mortgage
Type of Hardship: Reduced income, birth
Property Category: Primary Residence
Lender: First Franklin
Loss Mitigation Department
150 Allegheny Center Mall
Pittsburgh, PA 15212
To Whom It May Concern:
Re: Request for Loan Modification for property at ______________________.
Loan Number: ____________.
I’ve suffered serious financial setbacks and fear I’ll fall behind on my mortgage and lose my home unless I can get a loan modification, so I’m writing in the hopes you can help.
I am self-employed and my field is suffering dramatically because of the downturn in the economy. I am trying everything I can to keep and increase business, but I am struggling financially. I also have increased financial burdens, while my income is slowly decreasing, because we welcomed a new child into our family on of this year. While I am overjoyed to have such a wonderful addition, I am deeply worried over the impending financial obligations this brings. I am trying to provide for my family in very unstable times. My current debt-to-income ratio is __%, which spells a very difficult time ahead.
Status of payments/ Ability to pay going forward:
I am currently _ months behind on my mortgage, but I am current on my repayment program. My home is now in foreclosure. This is devastating to my family. To fight back, I have slashed our expenses until there’s nothing left to cut. I am researching new ways to improve my business, as well.
Due to the drop in my income and new financial responsibilities, I am requesting that you halt the foreclosure and reduce my payments to around $___ – $___ a month, including taxes, insurance, etc., which will will allow me to afford my mortgage again. I’ll do anything I can to ensure that my wife and child have a roof over their heads.
Thank you for your consideration of my request. I’m happy to provide any additional information you might need. My contact information is below.
Thank you very much for your time.
1. IRS 4506-T
2. 2 months of recent paystubs
3. Most recent tax return
4. Monthly housing & loan obligations