How to Write an Economic Hardship Letter?

How to Write An Economic Hardship Letter?

By: Malik Ahmad Attorney at Law. (No copyrights, use it extensively with your own revision at your own risk. No legal advice is meant and provided here.

[Malik Ahmad is a Las Vegas Attorney having his own law office. He is admitted to all the courts in the state of Nevada. His areas of practice include real estate, bankruptcy and loan modification].</ul>

By far writing and inclusion of a hardship letter is a must (a sine quo nun to use the legal lingo) and most sought after requirement by your lenders. Again, a letter should be precise and concise: write all the facts with dates, and other pertinent facts, one fact in one paragraph.

This hardship letter does not require and asking for the best English language writing skills but at least it requires a strong composition with details all the hardship you and your family are presently facing. Here, in this brief article, I am going to touch all those spots on which your lender may base their loan modification decision. Remember, the other supporting documents your lender requires are: (a) the bank statements, (b) the tax record for two years and (c) the paystubs (d) detailed financial/expense sheets. Almost every lender requires this hardship letter. Here, I am giving first all the hardship points which may or may not be required in each and every case, but which you can edit to suit your particular needs.

1. Hardship about yourself:
You are telling your own story. Write like a story.

“I had a continuous job at the IBM for the last 7 years, and the company shut down the local plant. Consequently, I was laid off from work. I have been looking for work for quite some time. Initially, I was drawing unemployment compensation, but since last few weeks (or months) I have ran out of this compensation. I sendtmy resume to various employers. Due to the current hardship, I am not getting many responses.”

“We barely are making our normal household expenses. If you look at our history of mortgage payments, you would see that we had a pattern of timely payments on our mortgage since originally we bought this home in 1999. It is only three months ago when we were first delinquent. We thought that we would catch up. Initially, we borrowed from our lines of equity, but that has been cut down and now frozen by our bank. We do not like to borrow from family and friends at this time.”

2. About Your Family:
“Luckily, my wife is still employed. She is employed as a registered nurse at the local hospital. She used to work overtime, but because of the depressing conditions, the hospital had cut down her overtime. Additionally, she worked parttime but recently the County had cut down its benefit program for the indigent”.

“We had lately an extended family in our home as parents of my wife joined us. My 82 mother in law is in frail health accompanied by my 92 years old father in law. Presently, both are living with us because they rural place where they lived had no modern medical facilities. My mother in law is suffering from Alzheimer. My wife had to take her quite often to the local professional medical offices. They had to go at least three times a week. Even though our in laws sometime contribute in household things but largely we bear the expenses.”

“Unfortunately, our 10 year old son was diagnosed with the disease of the liver. We had to buy the latest medicine which is not covered by our health plan, and there is no generic substitute of these medicines. We had to spend an upward of $300 every month on these medicines.”

“We had recently borrowed $20,000 from our pension plan which was spent on paying all the old medical bills as well as some needed home maintenance. We ran out of this money very quickly, and now the Pension Fund has placed severe restrictions on any more withdrawal.”

“My wife, who worked as a registered nurse in the local hospital always wanted to pursue a master degree in public health administration (MBA, Public Administration, Nurse Practitioner etc). She has enrolled in the University of Nevada in their master program where one more year has left in towards completion. She likes to become a university nursing teacher. Our expenses are quadrupled because of her enrollment and doing lesser numbers of hours at her regular employment”.

“I am enrolled in an MBA Program in the University of Phoenix (CPA, Law school, chef school, auto technician course, vocation schools etc). It is night program which is extended to 4 years degree program. I have almost finished the first two years. It was a wise expenditure of my savings as I was expecting a promotion in the place of my work. Hopefully, someday I would be rewarded for this hard work.”

3. General Situation:

“We had a lower interest rate initially for the first two years. We had a good FICO score and always thought that we can get better interest rate. Our loan officer promised us that once we are entrenched in our home for some time, we would be eligible for better interest rate. We had not seen any better interest rate other than the fact that these interests are constantly rising. We used to pay a payment of $1650 per month, which was increased for an upward adjustment to $1850 and now since the last three months had gone up to $2450.

“This is an exorbitant amount which unfortunately we cannot pay. There is a choice to either pay for the basic necessities of life or pay just the mortgage only. We had also seen a sharp increase in our utilities bills including the cost of transportation. Furthermore, my commute time has been increased due to our work place relocated in far off place from my home.”

“Our loan officer always told us that our interest rate is locked at 5% percent. We were shocked when one of our attorney friend came to our home for a social function and we showed him our escrow papers. According to him, there are quite a few violations of RESPA and TILA. First of all, we were never provided a copy of the good faith estimate. Secondly, we see some issues with accounting disclosures. Thirdly, we were supposed to provide two set of copies of all the disclosures. We only were given one set of copies. Fourthly, my wife never signed any of these papers, even though she is on all the loan documents. Again, we had enough income and we never asked for “no-doc loan”. We had verifiable FICO score but still was offered No Doc Loan. We were not provided this entire disclosure certificate under TILA. Our attorney friend told us that in his opinion we are a victim of some predatory lending practices, and that we should seek an immediate legal help. Even though we have passed some of the time period, but we can still puruse under deceptive trade practices. He also told us to seek some forensic loan audit because lots of numbers do not add up here.”

“We are not litigious people. At this time we are requesting a loan modification with a significant decrease in our interest rate as well as a reduction in our principal balance. We are not delinquent kind of people. We like this home, and like to continue staying here. This has been a part of our American Dream. Our economic hardship is temporary and hopefully would resolve in next few years. At this time we are requesting a loan modification with a significant decrease in our interest rate as well principal. Interest rates are historically low and your bank had also accepted federal bailout money. We do not anticipate another loan modification, and if this done right we would abide by all the terms and conditions set by it.”

More …

“We told our loan officer and we never hid any assest and told the truth in answering all the questions about our finances. We never gave him any wrongful information. We were shocked to see the financial statements recently found in our mortgage papers. Some of this financial information is not true. It shows lots of assets belonged to us at that time. We barely had few thousand dollars in our bank at that time. My wife had to borrow few thousand dollars from her parents which we are still returning them in the shape of small payments. I also borrowed from my 401 K plan to put this downpayment. Our loan officer told us continuously that we will be able to refinance this home with lower interest and we should not worry. Furthermore, my wife never got a copy of the good faith estimate. She barely signed only in one documents. Her signature is not present on many pages. We never even got the HUD statement. I told the loan officer that my last place of employment was temporary and I only worked there for about six months, and for some unknown reasons instead of writing six months, he wrote six years. That is plainly laughable because I lived in Las Vegas prior to the close of escrow only one year, and there is no way I could have worked six years. Even my employer was not living for six years in Las Vegas at that time. No one ever bathered to verify my job or employment history. In fact, I have no continuous pattern of job as sometime I also worked as an independent contractor.”

“We have an addition of a new baby in our family. It is a welcome addition but it came with a price. My wife who was already on Family Medical Leave from her employment, chose to stay home and take care of the baby. She thought initially to work from home while taking care of the baby. She had prior experience of working from home, but the plant and the manufacturer she worked for previously, had recently shifted all their facilities to China. Now, she get little bit of work from China, but not much and which is not enough to support us as the day care needs of the new born baby is growing.”

“my two grown sons and a daughter are enrolled in the local university, and the University of Nevada had recently announced a great increase in the tution and other charges. Even though we had planned for the tuition of our children long time ago, but the funds are insufficient due to this increase.”

“We had a recent death in our family. One of my uncle who raised me as a child, and was very close to us, died of a protracted illness. We had to incur lots of expenses on home health on this lovely relative.”

More Facts:
–A new baby was born in our family.
–We are lucky, my wife gave birth to 6 children (yes we were the headlines for quite sometime)
–We were transferred to another job in a different state, and it was not economical and feasible for us to migrate and reestablish our roots in a different environment. Our children also liked the local school.
–We are also taking care of the parents of my wife. These folks are good decent people who cannot get the required medical help in their rural homes. We need to take them to various medical facilities.
–My husband stopped child support payments because of his own unemployment. I cannot go back to court because the attorneys are expensive in these situations.
–My trial loan modification has ran out. We continuously paid all the trial payments. We are still expecting permanent loan modification papers.