In order to gain lender approval for foreclosure prevention actions on home loans in or facing default, many homeowners are required by their lender to provide a hardship letter to stop foreclosure. Though each letter is unique in content and requests, the general formatting, tone, and information provided is similar in successful hardship letter requests. If prepared poorly enough, a hardship letter can be denied, which means a homeowners options to prevent foreclosure through lender-approved options no longer exists. However, worse than this scenario, are those cases when a homeowner avoids or ignores attempts by their lender and their lender’s loss mitigation department to get in contact with a homeowner facing default and foreclosure. Outlined below are tips and other suggestions homeowners should be mindful of when mailing their lender a foreclosure hardship letter.
Things to Avoid in the Preparation and Formatting of a Hardship Letter
The creation and writing of the hardship letter itself is important. Aside from the content of the hardship letter, the following list provides tips on what not to do when creating and typing the letter itself, including:
- Do not format a hardship letter in any other form than that used in business letters
- Do not fail to affix the appropriate identifying information concerning yourself, your home loan, and your loss mitigation case number to the document in a clear fashion
- Do not attempt to email a hardship letter, unless otherwise requested by your lender
- Do not write illegibly, or if possible, even handwrite the letter at all. Type the document in word processor using standard fonts and black ink
- Do not misspell or use obvious grammatical errors
- Do not use a tone or voice that is threatening or otherwise antagonistic towards the lender
- Do not attempt to mail the letter via standard mail, rather use certified mail
- Do not create a hardship letter that is more than one page, or at most with headings two pages
- Do not send the hardship letter without adequate documentation supporting statements made in the letter itself
Things to Avoid in the Content of a Hardship Letter
In essence, a hardship letter seeks to prove to a lender the homeowner’s long-term ability to meet mortgage or deed of trust obligations, in light of recent hardships. This means that the homeowner should at the very least convey a detailed understanding of their current home loan status, as well as their current income and expenses, which should be documented in a hardship letter. Furthermore, the following items should be avoided when creating the content of a hardship letter, including:
- Make false statements regarding any item mentioned in the hardship letter
- Make statements or claims without sufficient documentation to support these statements, especially those related to the reason for one’s hardship request, current income level, and expected future income level
- Make requests for foreclosure relief that are not feasible
- Make disparaging statements about a lender or provide prolonged emotional statements on the current hardship; stick to the financial facts as much as possible
- Make any financial claim without documentation, or explain why documentation does not exist
- Make statements in the hardship letter that convey a lack of interest or understanding of one’s finances or current mortgage loan situation, and at the same time, include language used by the lender and the home loan industry, if applicable
- Make any request for foreclosure relief without justifying how these adjustments or temporary reprieve will enable a homeowner to meet long term home loan obligations
Getting Legal Help with Hardship Letters
For those homeowners unsure about how to prepare a hardship letter, or unsure about the best method to remedy their outstanding mortgage or home loan in trouble, consulting with a foreclosure prevention attorney will prove useful. An attorney can not only prepare and file hardship letters for homeowners, but more importantly, an attorney with experience in foreclosure prevention cases can advise homeowners on the best possible method of loss mitigation concerning their existing home and home loan, including informing them of all the future implications any decision may have.
