Hardship letter and attorney

[distressed31]

We bought a house for $595K and now it's valued at $420K. I have 2 loans:

1) 15 year fixed at 7.625% on $89,250.00
2) 7 year ARM at 5.5% on $476,000.00

Along with the negative equity, I lost my job for 3 months and borrowed money from family. I have not approached my lender, Bank Of America, as of yet, but plan to do so this week. Reading various threads and gathering information, I prepared a Financial Statement and wrote a harship letter. What do you think about this hardship letter ? Does an attorney provide added value ? In other words, what value do they provide ? Do they negotiate a better deal ?

Your comments will be greatly appreciated.


Sample hardship letter :

I am writing this letter to explain my unfortunate set of circumstances that will cause us to become delinquent on our mortgage. We have done everything in our power to make ends meet but unfortunately we have fallen short and
would like you to consider working with us to modify our loan. Our number one goal is to keep our home and we would really appreciate the opportunity to do that.

The main reasons that will cause us to be late are:

1) Distressed31 was unemployed for 3 months
2) We have to repay distressed31's sister for the $30,000 that we borrowed.
3) Negative Cash Flow of $850/month on Rental property
4) 7 year ARM Interest only loan with balloon payments.

In 2009 and going forward we forsee additional hardships that will cause us to think very hard about this house:

1) We are starting a family
2) We plan to support my mother and my wife's parents.
3) Unstable IT market
4) Excess of $200,000 of negative equity

We are at a point where we cannot afford to pay what is owed to Bank Of America. It is our full intention to pay what we owe. But at this time we have exhausted all of our income and resources so we are turning to you for help. Our situation will get better because we will cut our expenses and we
feel that a loan modification would benefit us both. We would appreciate if you can work with us to reduce principal balance and lower payments so we can keep our home and also afford to make amends with your firm.

We truly hope that you will consider working with us and we are anxious to get this settled so we all can move on.

Sincerely and Respectfully,

[Moe Bedard]

Hi distressed31,


Welcome to the forum and thank you for joining............


Since modifications given are up to the investors on the loans, hiring a third party wouldn't guarantee that the outcome would be different then if you were to do it yourself...............so you may want to see what the options are going to be first and then make a decision from there if you feel that you may need additional help.

BofA Loss Mitigation
1-800-936-6362



Your letter is good, however, with BofA as a servicer, you may want to change the wording in the line.............

Excess of $200,000 of negative equity

to being unable to refi because of not having equity...........

While loss of equity is a very realistic hardship to us, BofA and other lenders do not consider loss of equity as a hardship.........but you would want them to see that you are not able to refinance because of it instead.


These are what most lenders consider to be generally acceptable hardships....

1. Loss of job or reduction in income
2. Death of the homeowner, spouse or family member
3. Illness of homeowner or family member
4. Divorce or separation
5. Forced job relocation by employer
6. Adjustable rate reset-payment shock

The best way to set up a hardship letter..........

* First, describe the hardship and the circumstances that caused it
* Explain what steps have been taken to correct the situation
* Provide the lender with your plan to get back on track and stay there
* Assure the lender that you are a responsible homeowner who just needs a second chance and that you are very motivated to save your home

[distressed31]

Thank You ***. I'll rewrite the letter