If ever a homeowner is trying to obtain either a loan modification or a short sale from a bank, he, or she will be asked to prove that there is a hardship, which makes paying the existing loan at its existing terms impossible. One of the primary pieces of information the bank will need to ascertain this is the Hardship Letter.
Although it might seem self explanatory, I have seen some pretty wild letters come by my desk, as well as countless questions about how to write one of these. Indeed, there are some things that really need to be in there. So, here is a little guide to helping you write a Hardship Letter if ever you need one.
First, you must really have a hardship. Don’t laugh. I don’t want to pay my mortgage anymore, is not considered a Hardship. There must be something concrete that is problematic for you; something in your life that has changed for the worse, since the time you originally obtained the mortgage. Some examples:
- Job Loss
- Death (Yours or someone else’s who used to help pay the mortgage)
- Salary Reduction
- Reduced Hours at Work
- Injury or Disability
Second, you must ask for whatever it is that you want in the letter. Specifically, if you want a modification, state that you would like a modification, and for how much. If at some point you are turned down for the modification, and realize that you will have to sell a house that is upside down, then you will need to state that you no longer want a modification, and that you now want the bank to accept a short sale.
Third, conclude by stating that if the bank does not allow whatever it is that you are asking, then you will surely go into foreclosure. This makes it clear that you are not going sell your children, rob a bank, or go to any other extreme means to pay the loan. You are done paying, come what may.
The format should pretty much be:
- I used to make X amount of money, making it easy to pay for my loan.
- I had Y happen in my life, which now causes me to make a lot less money, making it impossible to continue paying my loan.
- It is for this reason that I would like you to accept a (Loan Modification/Short Sale).
- If you do not do this, the house will surely go into foreclosure.
Sweet. Short. To the point. Hope this helps.