If you find yourself in a situation where you need to consider a short sale, you must write a hardship letter to your lender. Go into moderate detail about the situation in the hardship letter. If you're having more than one, go into detail about each one.
Because it is the primary representation of one's financial situation, a hardship letter should be well written. It explains why a loan has become delinquent. Hardship is a recent event that is best described in writing because the figures and numbers on financial statements may not accurately reflect it.
It should also explain anything that will appear on tax returns, bank statements, and other financial documents. A large deposit from a retirement account to keep your bills paid, for example, or if your taxes showed substantial income last year but you are now unemployed.
The following are examples of hardships:
Unemployment
Increase in medical bills due to a reduction in income
A contributing family member has died
Divorce is a common occurrence
Medical Problems
Change of address
Involuntary incarceration
Expenses have increased, and debts have increased.
Unforeseen disasters necessitating extensive repairs or maintenance
Military Service
Hardship letters are usually one page in length and cover the following topics:
What led to the current financial situation?
Since the original financing, how has the real estate market changed?
What was done to try to make things better?
Why can't the situation be made better?
Lenders may ask for supporting documentation such as pay stubs, tax returns, or bank statements to show that you don't have enough money to pay off your mortgage. It's also a good idea to provide comparable sales from an agent to support your claim that your home isn't worth enough to cover the costs.
Contact and information
On the top of the letter, write your name, address, phone number, loan number, and date, and then list your lender's name and address.
Introduction
Describe your financial hardship to your lender, including the reason or reasons you fell behind on your payments.
Explain how your circumstances have changed so that you will be able to keep up with your mortgage payments in the future. Include details about any money you've set aside for a workout contract. Tell the lender you're working with a housing counsellor and include their name and agency's contact information.
Body
Instead of including all of your income and expense information in the body of the letter, you might want to include a copy of your household budget. A budget may be required by some lenders. Make a list of your monthly net income from work and/or other sources. If other people in your household help pay your monthly expenses, include their net income. Include your current monthly mortgage payment, property taxes, homeowner's insurance, and association dues in your budget. Include all monthly payments if you have more than one mortgage. Include car payments, transportation, utility bills, phone/cable bills, health care, childcare, groceries, and anything else you spend on a regular basis in your budget.
Conclusion
Finish off the letter in a formal and respectful way. Request that the lender contact you once they have received your letter. In the end sign your name.
How to Write a Hardship Letter
How to Write a Hardship Letter
Here is everything you need to know about hardship letters and how to write a great hardship letter.
If you find yourself in a situation where you need to consider a short sale, you must write a hardship letter to your lender. Go into moderate detail about the situation in the hardship letter. If you're having more than one, go into detail about each one.Because it is the primary representation of one's financial situation, a hardship letter should be well written. It explains why a loan has become delinquent. Hardship is a recent event that is best described in writing because the figures and numbers on financial statements may not accurately reflect it.It should also explain anything that will appear on tax returns, bank statements, and other financial documents. A large deposit from a retirement account to keep your bills paid, for example, or if your taxes showed substantial income last year but you are now unemployed.The following are examples of hardships:UnemploymentIncrease in medical bills due to a reduction in incomeA contributing family member has diedDivorce is a common occurrenceMedical ProblemsChange of addressInvoluntary incarcerationExpenses have increased, and debts have increased.Unforeseen disasters necessitating extensive repairs or maintenanceMilitary Service Hardship letters are usually one page in length and cover the following topics:What led to the current financial situation?Since the original financing, how has the real estate market changed?What was done to try to make things better?Why can't the situation be made better?Lenders may ask for supporting documentation such as pay stubs, tax returns, or bank statements to show that you don't have enough money to pay off your mortgage. It's also a good idea to provide comparable sales from an agent to support your claim that your home isn't worth enough to cover the costs.Contact and informationOn the top of the letter, write your name, address, phone number, loan number, and date, and then list your lender's name and address. IntroductionDescribe your financial hardship to your lender, including the reason or reasons you fell behind on your payments.Explain how your circumstances have changed so that you will be able to keep up with your mortgage payments in the future. Include details about any money you've set aside for a workout contract. Tell the lender you're working with a housing counsellor and include their name and agency's contact information.BodyInstead of including all of your income and expense information in the body of the letter, you might want to include a copy of your household budget. A budget may be required by some lenders. Make a list of your monthly net income from work and/or other sources. If other people in your household help pay your monthly expenses, include their net income. Include your current monthly mortgage payment, property taxes, homeowner's insurance, and association dues in your budget. Include all monthly payments if you have more than one mortgage. Include car payments, transportation, utility bills, phone/cable bills, health care, childcare, groceries, and anything else you spend on a regular basis in your budget.Conclusion Finish off the letter in a formal and respectful way. Request that the lender contact you once they have received your letter. In the end sign your name.
