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Who is responsible for writing a hardship letter to the lender?

It’s the homeowners responsibility to write the letter or obtain help from a real estate investor if one is involved.  The real estate investor can offer valuable experience and samples of hardship letters for homeowners to write a letter.

The hardship letter should be personal and give the homeowner a chance to get a lender to accept the smaller amount from the short sale.  A well written hardship letter is moving and personal, but also includes complete backup of the proofs of that hardship.  The best hardship letter will convince the creditors that the homeowner’s situation is genuinely distressing and the lender would be better off accepting the smaller amount than pursuing a foreclosure.

The hardship letter is quite important to the short sale package delivered to the lender. So, to receive an approval from the lender, the letter must be compelling and very descriptive at explaining why the borrower has defaulted on their loan. The borrower will need to give dates, reasons and really make an attempt to play with emotions.

Here are a few reasons WHY a borrower may default on a loan:

Death

Job Transfer

Divorce

Job Loss

Illness

The bank will ask if the problem is temporary or something with lasting effects. If something appears to be a permanent situation, the bank will look at it from that perspective.

Keep the letter under 2 pages and ideally only on 1 page. It’s also a good idea to have the homeowner hand write the letter and sign it at the bottom. Write a kind, courteous letter with some compassion as an actual human will be reading the letter and may have a part in the decision making.

Sample Hardship Letter

If you are doing a short sale, here is an example of a hardship letter that you would send to the lender when having your home considered to be a short sale.

Date

Lender Name
Address
Loan Number

Re: Hardship

Dear Sirs,

Our names are (insert names) and I’ve/we’ve been paying the mortgage on our home at (insert address) for (insert number of years) years now.  We have done everything in our power to make ends meet but unfortunately have fallen short and would like for you to consider working us to modify our loan.  Our number one goal is to keep our home and would appreciate the opportunity to do that.

Explain your hardship (include dates and specific incidents that caused you to get behind and explain how it could be resolved.  A hardship can include: Adjustable rate mortgage reset shock, illness, loss of job, reduced income, failed business, job relocation, death of spouse or co-borrower, incarceration, divorce, death, military duty, marital separation, reduced income, medical bills or damage to property via a natural disaster)

(Explain what steps you’ve taken to correct you financial position to cut back on spending, canceled spending – like cable and if you’ve met with a Credit Counselor).

We would appreciate if you could work with us to lower the delinquent amount owed and/or payments so that we can keep our home.

We truly hope that you will consider working with us and are anxious to get this settled.

Sincerely and Respectfully,

Borrower(s) Signatures

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