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5 Critical Real Estate Hardship Letter Errors

Aug 27, 2008
At a loss about writing a real estate hardship letter?

You're not alone!

When a lender a requests a letter as part of your hardship package, you may be tempted to sit down and write something to explain all the intimate details of your situation and how you got there.

This is not what the lender wants!

If you make these five critical errors when you write your hardship letter, you'll make your negotiations more difficult than they already are.

Do not treat it as a personal letter. You have to set the right tone throughout your letter. This is a business letter...not a personal one. Regardless of how emotional you are about your situation, you must stay focused. The issue - as the bank sees it - is that you're behind on your payments.

They realize unfortunate situations are often what caused you to fall behind, but they don't need to hear every little detail of that situation.

Business letters are matter of fact rather than emotional. It may help you to write the letter as if you are writing it for a friend. Pretend you're writing about someone else's situation rather than your own.

Do not ramble on forever. You're very busy every day...we all are.

So is the loss mitigator you're dealing with.

They often work with 100 - 500 homeowners at a time. They have to keep all of those individual cases on track. They get paid to turn non-performing loans back into performing ones, so they are motivated to push as many complete, thorough hardship packages as they can through the system. When you write a two or three page letter, it takes them a lot of time to scan it and pick out the information they need to continue the process.

Do not leave out critical information. Your lender needs to know several items. Leaving any of them out will slow your hardship package down and wind up frustrating both you and your loss mitigator.

1. Your account number, current contact information, and the address of the property.

2. Why you fell behind in your payments.

3. What is your plan to get back on schedule (what type of workout you're seeking).

4. A brief overview of your income and expenses (a budget or other financial forms will be part of the hardship package, so you don't want to go into very much detail.)

5. Any anticipated changes (good or bad) in your income or expenses and when you expect them to happen.

6. Why you are committed to making this plan work.

7. If you have any money saved to put toward the workout plan.

8. If you sent in payments that were returned to you, they will want to know what you've done with those payments.

Do not send in your first draft. An effective hardship letter is one that gives the loss mitigator the information they need in the most succinct manner possible. To provide this, you need to:

1. Know what information needs to be in the letter.

2. Write your letter (first draft).

3. Edit it until you've taken out as much of the extra fluff as you can.

4. Re-write your letter and send it off.

Do not send it to the wrong address. As obvious as it sounds, make sure you send the letter to the correct address. You'll probably need to send it attention to your loss mitigator (or the Loss Mitigation Department) at a specific address. I recommend faxing the letter in first and then sending it by certified, return receipt requested mail as well.

Bonus tip...avoid trickling your information in. Most of the time, your hardship letter is just one part of the entire hardship package. Send the entire package in together rather than sending it in piece by piece.

Again...fax it and then send it by mail certified, return receipt requested.

Don't simply get delivery confirmation! Spend the extra few bucks and get the return receipt...you want to know WHO received the package, not just that it was received.

It's your home...don't lose it! Remember, your lender sees many hardship letters every day. You want yours to be memorable for the right reasons! Short, simple, and to the point will save them time and frustration and keep your package moving through the system.
About the Author
Todd Temaat and his team have been negotiating with lenders to help homeowners keep their homes out of foreclosure for 10+ years. Now they're teaching owners the tricks to fight for themselves. Their most popular article describes writing a real estate hardship letter. Visit them at: http://www.truthinforeclosure.com.
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