At the request of their lender, or on their own accord, homeowners with a mortgage or deed of trust in default may elect to mail a foreclosure hardship letter to their lender’s loss mitigation department. By carefully preparing the hardship letter, as well as documenting any statements made in the letter, a homeowner may be able to gain approval from their lender for foreclosure prevention options, such as forbearance periods, modifications, adjustments, and other options, if applicable.
The Hard Copy of the Hardship Letter
The hardship letter itself should be carefully typed in standard business format, addressed to the loss mitigator handling your claim for your lender. The letter, and supporting documents, should concise, factually based, and highlight the important aspects of the hardship request only. In addition, homeowners should send the letter in a hard copy format via certified mail to their lender to confirm receipt.
The Content of the Hardship Letter
A number of samples and other examples of hardship letters are available online and elsewhere, but realistically, each hardship letter will contain case-specific information, statements, documents, and requests that only an individual homeowner can provide regarding their individual case. The first portion of a hardship letter should include the following information:
- Acknowledgement of contact with the loss mitigation department concerning a mortgage in default, as well as basic personal information to help a lender identify one’s mortgage or deed of trust
- A concise analysis of one’s current home loan status, including the amount of equity in a home and the current appraisal value of the property
- A documented outline of current assets and liabilities, including current income and expenses, as well as projections regarding future income and expenses
In addition, many hardship letters include a statement on the requested method of foreclosure relief desired from the lender at the beginning of the letter and a brief description of other actions taken to prevent default, such as those related to reducing expenses, before requesting hardship assistance from the lender. This can also be used in the latter paragraphs of the hardship letter to segue into the second section, which should include:
- Brief, documented, and supported statements on the current reason for inability to meet mortgage obligations. This will essential require a homeowner to state the reason or nature of their hardship
- Personal estimation on whether this hardship is permanent or temporary
- Personal estimation on how the proposed foreclosure relief remedy will work given the current income and expenses of a homeowner
With these elements included in a hardship letter, a homeowner will then need to provide documentation to support claims made within the letter, especially those relating to projected future income, the nature of the hardship, and the ability to meet payment obligations under a proposed foreclosure prevention remedy.
Getting Legal Help with Hardship Letters to Stop Foreclosure
In most cases, a homeowner will benefit from the assistance and counsel of an attorney with experience in foreclosure prevention cases. Not only can an attorney assist with the preparation and filing of hardship letters, but more importantly, an attorney can effectively outline the best options for a homeowner to prevent foreclosure, whether with their lender’s approval of the hardship request or otherwise. A homeowner seeking legal counsel will benefit from the objective advice from an attorney regarding their mortgage or home loan situation, while at the same time, can be confident that any suggested remedies are in the homeowner’s long-term best interests exclusively.
