For homeowners tasked with submitting a hardship letter to their lender in Illinois, the prospect of having a hardship claim denied is understandably unsettling at best. Many homeowners struggle with creating a hardship letter that conveys the desperation of their current situation, while at the same time, portraying themselves as responsible borrowers. In addition, many homeowners lack perspective on how lender’s stand to benefit from foreclosure hardship requests, in light of the potential losses associated with foreclosure costs and auction sales. The following articles outlines some tips for writing a hardship letter related to a property in or facing default in the state of Illinois.
Lenders Stand to Benefit from Granting Hardship Requests
If a hardship request is denied, what will most homeowners end up having to do? Foreclose on their home. Actually, their lenders will have to foreclose on the home, which incurs the lenders costs, fees, and most notably, a large margin of loss potential to be realized at any foreclosure auction sale. For this reason, most lenders will actually stand to profit from any reasonable hardship request, in light of the alternative risks inherent with foreclosing a property. As a homeowner writing a hardship letter, taking advantage of this subtle piece of leverage is possible through the following methods:
- Provide a current appraisal value of your home in a hardship letter, as well as document the probability of selling at this price, if at all
- Convey the real possibility of having to allow a home to go into foreclosure unless the given proposed workout is approved
- Convey your ability to meet the proposed terms of a workout through documentable measures, such as income, expenses, and other relevant factors, such as having located a potential third party buyer in a short sale deal
Lenders Review Hundreds of Hardship Letters Each Week
In most cases, one of the best tips for writing a hardship letter is for homeowners to get on the phone with their individual loss mitigator before and after submitting a hardship letter. Each loss mitigator has dozens of hardship requests to review, but by maintaining close contact with the individual, homeowners can garner helpful information and keep their case in the forefront of a given mitigator’s mind. In addition, homeowners should consider making their hardship letter as brief, uniform, and accessible as possible for their lender, which includes coherently organizing and providing any supporting documentation alongside a given hardship request.
Lenders Want to See (In Numbers) How A Proposed Workout Will Work
With any proposed hardship request, lenders will want to see how homeowners suggest they can manage keeping up with the future obligations, should a given hardship request be approved. This will include documenting income, expenses, assets, other debts, and including projections and documentation of expected adjustments to any of these figures. If a homeowner proposes a workout involving leaving their current home, a lender wants to see how the sale or transfer of the home can settle an existing mortgage or deed of trust obligation, or how the proposed remedy will garner the lender more proceeds than pursuing a foreclosure auction sale.
Getting Legal Help
The case-specific nature of each hardship letter requires homeowners to seek outside legal counsel, to ensure they are preparing and filing a hardship request that is in their best interest, but also, one that will be found favorable to lenders. Consult with an attorney about foreclosure prevention, including preparing, submitting, and negotiating hardship letter requests, before making any agreements with your lender.
