A foreclosure for anyone can be devastating financially, emotionally and psychologically. Your family is forced to physically move away from friends, family and neighbors that they have come to love and lean on. As if that is not enough, you have to face incessant calls from bill collectors and explain to them that you are still unable to pay your bills.
The foreclosure process is not only lengthy it can be humiliating. As soon as a homeowner realizes that they are in over their heads, a financial hardship letter becomes a way out, or light at the end of a very dark tunnel. Written properly, a financial hardship letter can result in a positive outcome for all parties involved.
Contrary to popular opinion, lenders do not relish the idea of losing money in a soft market due to foreclosures. They have to look at the loss of income due to an empty property and the expensive legal fees that it costs them to actually precede with a foreclosure.
Lenders are also not realtors. It is not their job to try to sell your home and as a result, they are inadequate at it. They must now finance the maintenance, insurance, security and marketing of a home that they know very little about. They may have the black and white facts about it, but they know nothing about details of selling your home. The simple writing of a financial hardship letter can help to avert this fate for both you and the lender. Federal funds have been put in place that will help the lender, through the loss mitigator, give the homeowner options to avoid a foreclosure.
Loan modification is dependent solely on the initial submission of a financial hardship letter. This gives the lender a written decree of reasons that the homeowner has fallen behind on payments. This letter gives the loss mitigator a glimpse into the financial and personal reasons of the homeowner’s hardship. It also gives the lender personal reasons to help the homeowner try to salvage the mortgage with either a short sale or loan modification.
The lender will want to know as much information as possible about why the homeowner has fallen behind. The financial hardship letter gives the lender this information in a clear and concise manner. They need this information to be able to refinance or offer a short sale.
The lender will need to know the following details in your financial hardship letter:
1. Is this an ARM (Adjustable Rate Mortgage)?
2. Has the borrower been convicted of a crime that may cause prison time?
3. What is the current state of the borrower’s income?
4. Has there been some catastrophic illness in the family?
5. Has their been a layoff or job loss?
6. Is the borrower having to commute a long distance to survive?
7. Has their been a business failure?
8. Has their been a death in the family effecting contributions to the mortgage?
9. Is the primary borrower divorcing?
10. Is the borrower out for a military post?
11. Has their been significant damage to the home due to weather or fire?
A financial hardship sample letter is the key to a homeowner getting a timely answer to their request for loan modification. This sample letter will make sure that you have all the necessary information that a loss mitigator will need to help you as soon as possible to avoid foreclosure on your home.