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Examples of hardships for a hardship letter

April 26, 2009

writeOne of the items your lender will ask for during the short sale process is a hardship letter. A hardship letter is a written explanation as to why you fell behind in your mortgage payments. So swallow your pride and face the reality that you’re going to have to explain yourself before your lender says, “Oh, don’t worry about those 15 delinquent mortgage payments. And we’re comfy with you selling your home for $150,000 less than what you owe.” Consider it like having to bring a doctors note to school after missing a few days. The purpose of this article is to help you write a good doctors note.

Your goal is to stop the foreclosure process so start brainstorming for all the reasons why you are in your current financial crisis. And the bank expects you to be in a bit of a crisis too before they’ll consider accepting a short sale. If you’re current on your mortgage payments and have a fat bank account don’t expect your bank to forgive your debt. That wouldn’t make any sense now would it?

Here are some valid reasons for experiencing financial hardship:

  • Illness and/or medical bills
  • Loss of job
  • Reduced income
  • Failed Business
  • Job relocation
  • Death of spouse or co-borrower
  • Incarceration
  • Divorce or marital separation
  • Military duty
  • Damage to property (hurricane, flooding, fire)
  • Adjustable Rate Mortgage (ARM) reset shock

The last example of an ARM reset is becoming increasingly common so don’t be shy about adding this reason to your hardship letter. If you were paying $750 per month for the past few years and suddenly your mortgage rate adjusts to a $1200 payment you could very well experience a strain on your finances leading to a hardship. The difference between your old payment and new payment is the equivalent to a new car payment.

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