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Loan
Modification/Short Sale Hardship Letter
The
main
purpose
of
a
loan
modification/short
sale hardship letter is to convince
your lender that you will be able to pay your monthly mortgage payment
on time in the future - or that a short sale of your property is in their best interest if
they
modify/short
sell
your
loan.
Your lender has already calculated that they'll make more money by
foreclosing on you. Crazy, but that's the way it is.
The
first
paragraph of your letter should focus on the positive;
convincing the lender that modification/short sale is good for them, your lender. You can make the new, modified monthly
payment - your new income is stable, etc - or you're committed to
the most efficient transfer of ownership - it's better for them that
the property be continuously occupied and that you're committed to
helping find a buyer, etc. The first paragraph puts them into a
positive mind-set to read the rest of your letter. The longer we can
keep your file open in front of them, the better you look.
Basically,
your
lender
has
to
make
a
calculated decision based on your
current financial and employment status to determine if you will be a
good candidate for a loan modification/short sale. While
the
“Hardships”
that may have contributed to your unique scenario
are important to include in this letter, all you're doing is briefly
explaining the financial documents provided anyway.
You're humanizing the mortgage. We use the letter to force the
underwriter to
identify with your plight.
But ultimately, the underwriter/loss mitigation officer is
concerned with converting your non-performing, imminent default to a
performing asset. I have seen many suggested
hardship letter templates listed on the web.
I
truly
believe
that
no
template
is
a
"one
size fits all" solution. That's why I resist
composing letters for my clients. What
happens when your underwriter reads the same letter twice (and yours is
the second one)? I believe that personalizing the hardship is much more
efficient and beneficial to your application. I will personally assist
you in composing the letter, without putting words in your mouth.
One final caveat: Make no mention of any reduction in property value.
The underwriter doesn't care. It'll just annoy them. It's all about
your income reduction. Yes, you paid for
a mutually accepted appraisal. Yes, they accepted the value at closing.
No, they
don't have to accept responsibility for the recession economy, other
than the modification or short sale. (On the other hand, they didn't
look at your
credit this time, either.)
(Sample Format):
Your name and address, upper left corner
Lender/Servicer name and address, upper left corner
Loan Number
Date (right side)
Dear Loss Mitigation Dept; (sounds better than Grand Poobah)
Please consider this letter of hardship in partial application for our
(mortgage modification/short sale)
(All the good reasons to approve your application.)
At least a page of all the bad stuff. (at least a page, no more than
two pages)
Make sure to sign your letter, black ink is good.
Foreclosure?
Hell, I'm gonna shoot something!
Foreclosure Timer
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