Foreclosure Hardship Letter – Sample for Bank Loss Mitigation Department
A foreclosure hardship letter is an integral part of the Loan Modification or Short Sale package. When homeowners face foreclosure, these documents are sent to the Mortgage Lender’s Loss Mitigation Department. Loan modifications are offered to homeowners who have the financial ability to catch up on late payments. Short sales are offered to homeowners who do not have the financial means to pay their mortgage payments. Lenders who accept short sale offers agree to accept less than is owed on the mortgage note.
For most people, the foreclosure hardship letter is the most difficult aspect of loan modification or short sale proceedings. It can be excruciatingly painful to put the circumstances that caused the homeowner to fall behind on mortgage payments on paper. Many people are intimidated by the hardship card. They don’t know what to say or how to format the letter, making it easy to read and understand.
Note that foreclosures and short sales are handled by your lender’s Loss Mitigation Department. Employees in this department are called loss mitigators. Before you can submit a loan modification or short sale package, you must receive approval from the loss mitigator assigned to your account.
You will most likely have ample opportunities to speak in person with the loss mitigator who manages your account. These people deal with homeowners in financial distress on a daily basis. Take advantage of building a relationship with your assigned mitigator and ask questions to help you better understand what your mitigator expects. Loss mitigators can make or break your deal, so always treat them with respect and provide the information they request.
Your personal loss mitigator will read your foreclosure hardship letter. Note that these people receive dozens of difficulty cards daily. Therefore, it is critical that your letter be short and to the point, while covering the relevant facts.
When composing your hardship letter, you can either handwrite or type it. If your handwriting is illegible, it is best if you write the letter or have someone else write it for you. The Foreclosure Hardship Letter is one of the most important elements of your loan modification or short sale package, so take every precaution to make sure it can be easily read and understood by the Loss Mitigator.
Real estate experts recommend using a business format for your foreclosure hardship letter. This involves putting your name, address, city, zip code, and phone number at the top of the page. Leave two spaces, then write the name of your loss mitigator, the name of your mortgage lender, along with your mailing address. The next line should include the current date. Put your loan number below the date. The body of the letter should be between four and six paragraphs. Close the letter by signing and printing your name.
The following is a sample foreclosure hardship letter. You can make adjustments to the text depending on whether you are looking for a loan modification or a short sale agreement.
Bob and Jane Smith
123 Any Street
Your City, State 12345
Tom jones
US Lender
123 Anywhere Avenue, Suite A
Any city, state 12345
Current date
RE: Your loan number (include Loan Modification or Short Sale)
Dear Mr. Jones,
We are contacting you today to request a (loan modification or short sale) for our property located in (insert address, city, state). We appreciate the opportunity to explain the circumstances that have caused us to be late in our mortgage payments. Although we have done everything we can to improve our financial situation, we still lack the money that we owe you.
The reason we are behind on our mortgage payments is (explain the reason here). Right now we don’t have enough income to pay our regular monthly mortgage payment. We are concerned that we are falling further behind and cannot pay what is owed. We fully intend to pay what is owed, but at this time we do not know how to achieve it. Therefore, we turn to you for help.
We are requesting consideration to reduce or temporarily suspend our mortgage payments for a few months (or allow us to sell our home through a short sale). Doing so would help us get back on track. Our home means a lot to us and we want to work with you to avoid foreclosure. Inform him of all the options available to you to stop foreclosure (or start a short sale) as soon as possible. We are eager to reach an agreement and we appreciate your prompt response.
Respectfully yours,
Print name of borrower (s)
Signature of borrower (s)
Loan #
Speak to
Telephone
email address (if applicable)
It is imperative to send the foreclosure hardship letter by certified mail with a receipt requested. This will ensure that you have proof that you sent the letter. The acknowledgment of receipt must be signed by someone from the lending institution and the signature card will be returned to you by mail.