By Malik Ahmad, Attorney at Law
(No copy rights reserved: Use it extensively with your own revision at your own risk, just send me an email of acknowledgement. No legal advice is meant and provided here]
[Malik Ahmad is a Las Vegas Attorney having his own law office. He can be reached at Malik11397@aol.com. He is admitted to all the courts in the state of Nevada. His areas of practice include real estate, bankruptcy and loan modification].
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. This hardship letter does not require and asking for the best English language writing skills but at least it mandates a strong composition which details all the hardship you are presently suffering. Give them a laundry list of all the economic problems you have. Don’t make it too long. A synopsis is enough. Here, in this brief article I am going to touch all those spots on which your lender may base its loan modification decision. Remember, the other supporting documents your lender requires are: (1) the bank statements; (2) the tax record for two years and (3) the paystubs. Almost every lender requires this hardship letter. Here, I am giving first all the hardship points which may or may not be required and suitable 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 almost send my 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 though 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 part time but recently the County had laid down its benefit program for the indigent”.
“We had lately an extended family in our home as parents of my wife had 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 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 and which was spent on paying all the old bills. We ran out this money 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 her 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 though 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 bill 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 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. We were never provided a copy of the good faith estimate. We were not provided this entire disclosure certificate under TILA. Our attorney friend had told us that in his opinion we are a victim of some predatory lending practices, and that we should seek an immediate legal help. He also told us to seek some forensic loan audit.”
“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.