Short Sale Hardship Letter Is Your Key To Winning With The Banks
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Home Page > Finance > Real Estate > Short Sale Hardship Letter Is Your Key To Winning With The Banks
Short Sale Hardship Letter Is Your Key To Winning With The Banks
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Posted: Mar 10, 2010 |Comments: 0
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With the way the current housing market is going there is no surprise that lenders are presenting delinquent homeowners with short sales as the option to take to avoid foreclosure. Lenders have made bad loans and those loans are destroying the housing market that is one of the main reasons why home values have dropped the way they have. Lenders came up with a loan that is known as an “adjustable rate mortgage” and an adjustable mortgage is good for homeowners that understand how to use it to their advantage. Most homeowners didn’t know how to use the adjustable rate mortgages which lead to one of the industry’s leading housing crisis to date. Lenders didn’t take the time to explain the process to homeowners, lenders were pushing paperwork through to homeowners with the mind state “sign here, so I can close so more loans”, not taking the time to make sure homeowners had a grasp of the adjustable mortgage.
That is why short sales are an integral part of lenders department called the loss mitigation, because short sales are the one sure fire ways to stop foreclosure, as well as, get lenders their bottom lines so they can re-invest the money that will be tied up through a long drawn out foreclosure proceeding. The major part of a short sale is the hardship letter.
The hardship letter is one of the documents requested by lenders so they can get an idea of what kind of mind state the homeowner that wants to walk away from loan has. No short sale will be processed until all of the necessary paperwork is submitted particularly the hardship, so in order to give the lender what they want the best thing to do is follow some of the foot steps of others that used successful hardship letters to explain their situation.
Some key points to keep in mind to make sure you have the best chances of writing a successful hardship letter is include your name, address, phone number, lenders name and account number at the top of your hardship letter. Include all of the above information because paperwork being processed by bank represented can sometimes get misplaced and by having that information will ensure your hardship letter will find it’s place back to your file.
The following items are some more things you want to drive home so your lender can step into your mind to see why you think a short sale is the most via option which will likely persuade them as well:
a) Include the steps you have taken to prevent from becoming delinquent in the first place. There’s more than a lender wants to see than for you to have exhausted every other way possible to continue making the payments, so if you lost your job, they will want to know did you file for unemployment or have you tried to borrow money from a relative.
b) They also want to know have you been through HUD counseling, since HUD offers free services so they can talk about the different options available for you.
c) They want to know have you tried selling your house for full market value. If you haven’t tried to sell your house on the open market, then that is something they will request before they consider you for a short sale.
d) Be sure to add any damages that need to be repaired that can keep the house from selling to cover their loan.
e) Request that the lender waives any deficiency judgment that they may consider pursuing since they are taking a lost on a short sale.
f) Sometimes it’s good to add that you will consider filing bankruptcy, because nothing scares a lender more than tying up their money for some unnecessary time if they don’t have too.
g) Make sure you hand write the letter because it gives your letter a personal feel, but if you can’t write legibly or find someone that can then go ahead and type it out then sign and date like you would if you were hand writing it.
Homeowners, short sales are a very delicate process and having a proper drafted hardship letter will work wonders for those of you that have a true hardship. As long as you have a permanent problem with a good letter backing up what you have said, then if you buyer comes with a reasonable offer you can be confident that your lender will take into consideration everything you have said and approve your short sale.
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D. Mazyck -
About the Author:
D. Mazyck is the acquisitions manager for Buyers of Charlotte a web based company that buys houses from homeowners that find themselves in foreclosure and provide alternate purchase strategies such as buying through a short sale which can help homeowners stop foreclosure. BofC is now buying houses nationwide and setup a web page for homeowners to get more information about short sales. You can visit them Bofc at Short Sale and for homeowners that want to sell their house to stop foreclosure can go to Stop my Foreclosure, you can also call us toll free at (888)219-8619 extension 200. Be sure to bookmark this article and email it to your family and friends that might find the information useful.
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I was denied a Hamp mod due to NPV caculations. My lender will not explain these terms to me. They said they cannot help me. I need to short sale and get out. Can u please help me
What are tax implications of short sale ?
What are the repercussions of a short sale ?
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D. Mazyck is the acquisitions manager for Buyers of Charlotte a web based company that buys houses from homeowners that find themselves in foreclosure and provide alternate purchase strategies such as buying through a short sale which can help homeowners stop foreclosure.
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There have been numerous measures taken by legislators and private organizations to pursue advancement of consumer protection in the real estate industry. A buyer or seller can also benefit from various online sources that provide guidelines in entering a particular transaction. Then again, there are some aspects that the lenders or banks themselves do not divulge to their clients. For one, there are details of short sales your lender would not tell you before or even during the transaction.
First of all, lenders are not legally required to disclose every single detail to their borrowers. They are given the right to acquire their own measures in protecting their investments. Especially with short sales, lenders have full control whether to give you a shot in entering this venture. As they want to still yield profit despite losses from your delinquency, they would naturally do everything in their power to manipulate the transaction. However, as a consumer, you also have the right to be in the know of the transaction aspects that can affect your decisions. Below are some areas where lenders tend to keep some sort of confidentiality.
Hardship letter contents
Only one out of ten applications for a short sale gets to be approved in most banks. Most lending companies approve hardship letters that are compelling enough. This may seem shallow but even the ink color and paper used can influence some lenders. Then again, they can easily sense if your appeal is lacking authenticity.
Disinterest in your property
The main concern for lenders is the money you owe them. They are particularly evaluating your property either as an asset or a liability. And once you fall out with your dues, the lesser interest they would want to keep your property, lest visit your home. They will do every measure to fast-track disposal of your property. Then again, they will not disclose such information so as you will maintain attachment to the home, thus, remain indebted to them.
You can stop paying your mortgage
A lending company will be more motivated to accept a short sales if you default on your mortgage. Note that it is not necessary to be in default before you can consider entering a short sale. But once you take on this option, there are pressing drawbacks you have to thoroughly think of. Firstly, your credit report will suffer. You may be restricted from buying a new home and even easily lose your property to foreclosure.
No repayment obligation
This is only applicable if you are facing true financial hardship. You have to prove you have no other saleable assets to gain profit from or extremely have no means to pay your mortgage dues. Lenders are prohibited to enforce you to pay back what you owe if this is the case. But this does not mean the lender cannot file for a deficiency judgment.
By learning these ‘trade secrets’, you can be more adept in formulating a proposal that your lender will most likely approve of. On the other hand, being overly complacent that you will ace the approval of your short sale endeavor is still not advisable. You have to continuously plan ahead of time and be prepared of other demands your lender will present to you
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