Hardship Letters – How Much Do the Hardship Reasons Matter?

Hardship Letters How Much Do the Hardship Reasons Matter

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A financial hardship letter for mortgage companies or banks is a letter you send to your financial institution explaining why you are no longer able to make the payments on your house and indicate what you expect them to help you. These letters are one of the documents typically requested by the banks when you approach them for loan modification or short sale.

By no means are these letters the only documents necessary. However just how important hardship letters are among the pile of documents requested by the banks, such as financial worksheets, bank statements and income proof? Many experts suggest the hardship letters should be hand written. In reality, most banks' negotiators do not prefer illegible handwriting and would not give preference to letters that are too long in length or exaggerate your hardship.

Because most people run into more or less hardship in this economy, hardship letters become more and more like a formality than an actual basis for banks to evaluate your qualification. The negotiators typically use concrete numbers and facts, such as your income and expenses ratio and how far you are behind payments to make decisions on your case.

Your financial data shown on financial worksheets, bank statements and pay stubs are input into banks' computer systems which will prompt the negotiators available programs for your financial situation. Your focus to gain approval is more to fit into computer system's evaluation criteria than to earn your negotiator's sympathy.

Make sure your hardship letters are concise, preferably confined to one page (11pt font and single space) and include explanation of your current hardship and what the bank can help you. Explain clearly if you intend to keep the property (hence requesting loans to be modified) or sell the property (short sale or Deed-In-Lieu of Foreclosure).

Furthermore, you will most likely have to send in hardship letters more than once during the process. Some banks require the hardship letters to have time-stamp within 30 days old hence you will re-date and fax the hardship letters regularly, making handwriting unpractical. To the contrast, we recommend to digitalize/computerize all documents to save you from constant printing or handwriting the same materials.

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