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Prepared by: ShortSalesBuyers.com This handout is based upon industry knowledge. Last updated January 13, 2009. While this publication is designed to be accurate and current information, readers should consult an attorney or other expert for advice in particular. For any questions or concerns please email: info@getcrgnow.com

2009 www.GetCRGNow.com

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WHAT IS A HARDSHIP LETTER?

A hardship letter is a written explanation as to what event has caused you to fall behind on your mortgage and it vital in helping you stop foreclosure. This letter acts much like an outline or biography of your current life issues that are affecting your ability to meet your financial obligations. What is a good format to use? I recommend the five paragraphs, one page essay with a bullet list of key points for lenders in a hurry. Begin by stating your current situation in one or two sentences. Then add a sentence that tells the reader when things began to deteriorate, such as a job loss or illness. The final sentence in the first paragraph should contain your desired outcome or action: state clearly that you are willing to work out a solution and that you want to retain ownership of the house or property. After the first paragraph, a bullet list can help the reviewer make a quick and accurate assessment. The list should contain typical items used by lenders to make their decisions. Choose one or two reasons for the hardship. Here is a short list of typical reasons: Adjustable Rate Mortgage Reset- Payment Shock (uncommon, but we will see more lenders accept this in the future) Loss of Job Illness Bills Reduced Income Divorce Medical Bills Too Much Debit Death of Spouse Payment Increase Failed Business Job Relocation Damage to Property (natural disaster or unnatural) Military Service Incarceration Other (Please Specify)

The list should also include the amount of the loan and the number of months behind. When you look at this list, remember that some reasons are better than others. If you can, list a
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combination of reasons and emphasize the reasons that might appeal to a lender. If there is another important fact, include it, but dont make the list too long. You are trying to keep the letter to one page. After your bullet list comes an opportunity to add two or three paragraphs to provide more detail about your situation. Describe yourself in a bit more detail. Are you single or married? Do you have kids? Did you grow up in the area? How do you see your future? Is the change temporary or permanent? Will you be making changes in your life? Accountants reading this might say, good grief, go on Oprah, but most of them will stop reading at the bullet points. This part of the hardship letter is both for the lender and you. In a stressful time it is difficult to have perspective on things taking place in the present. This part of the letter will clarify your unique situation for yourself as well as the lender and may become the determining factor in your short sale. The final paragraph, should restate your hardship and your desire to keep the property along with a simple thanks for taking the time to read this letter type finish. When you create the heading do not address the letter To Whom It May Concern! Try to find out the name of the individual that will be reading the letter. If that is not possible a simple Dear Sirs is more dignified. Dear Lender works as well. Lenders are reviewing thousands of applications and may of the applicants are in similar circumstances. A good hardship letter can make you stand out from the pack. Here is a template below that you can use as a boiler plate for your own letter. Make sure you make it unique to your situation. Remember that your hardship letter is only one piece of the loan workout process, but key in short sale approval.

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HARDSHIP LETTER STRUCTURE

Please do not use the example below unless it strictly pertains to your situation. Your hardship letter should appear similar to the following: From: Subject: Your Name Name of Loan Co-Signer (if applicable) Mortgage please include mortgage number(s) and bank names (if you have more than 1 mortgage or more than one property just list them all here at once) Todays Date

Date:

To Whom It May Concern: MUST HAVE #1: Introduction What happened? Please state the circumstances of your financial hardship and include the following
Explain your hardship situation: Tell your lender the reason(s) you fell behind on your payments. Explain how your situation has changed so that you will be not be able to make future house payments. Include information about any money you have saved, workouts you have tried, finding a new job, etc Explain how you are currently surviving: living with family, renting rooms out, working a 2nd job, borrowed money, family etc.

Example: Reason I went into foreclosure is______________. (Please be VERY specific as to what happened and why you got into this situation; this will help get to the banks emotions).

MUST HAVE #2: Condition of Property As a result of the above circumstances I do not have the financial resources to make good on the past due balance on the mortgage or make the monthly payments. Also, the house is in need of the following repairs: IMPORTANT NOTE: List your repairs - once again, please be specific putting yourself in the shoes of a very picky buyer helps. Put what needs to be repaired and try to include, if applicable why.
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Possible Repairs: Carpet/Flooring my kids spilled food/drink and it is disgusting. Paint my dog has scratched the coat off, hand prints, spills etc. Windows- have not been updated Water heater - is over 9 years old Roof - is over 9 years old Original Kitchen cabinets all my neighbors have upgraded ones Holes a fight broke out, door slammed, furniture fell Door does not close right possibly a foundation problem Dry rot or wood rot Termites Bug infestation Mold typically in bathrooms Cracks name where Land Scrapping dead grass, weeds, etc Since Im in dire straits, I cannot afford to make the necessary repairs either. MUST HAVE #3: Closing Our home was appraised for $430,000 three years ago but the real estate agents have told me that our home will only sell for $250,000. I currently owe a total of $423,000 on our home. The house is not worth what I currently owe. I went to seek legal counsel because of my hardship and they said I can file bankruptcy and live for free for 6-12 months, if this short sale is not approved. Hopefully, you can work something out with the person interested in buying my house for less than what its owed. Please help me move on with my life. Thank you for your time and I hope we can have this matter resolved soon.

Sincerely, (Print Name) (Your Signature)

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