A California Story HUD or CRUD

[HUDCRUD]

Hello,

I am trying to help my brother avoid foreclosure here in California. He bought his house with a interest only loan for $412,000 in 2006. The first is with GreenPoint for $352,000 and the second was with another lender for $62,000. My parents gave him a loan for $112,000 to pay off the second along with a business line of credit and some business credit card bills to reduce his monthly expenses in Dec. 2007.

His income has been reduced due to higher operating expenses including extremely higher food prices for his restaurant. We spoke to a short sale person and told her that my parents are willing to buy the property in a short sale transaction. The short sale agent said that would not work, but instead wanted a family friend to buy the property and hold it for 6 months and then sell it to my parents. We turned down that suggestion as it was in my opinion fraud. We could not understand why my parents could not buy it at the short sale price if the bank had agreed on the short sale price. In my opinion, the price the bank is willing to accept is the price they are willing to accept, it should not matter who the buyer is that paid that price.

So now, my brother received the default notice with the names of HUD approved organizations that he can call to assist with working something out with the bank. I call the HUD approved organization who appears to actually be located in Maine, not California and speak to a rep. I tell him the story as stated above and he wants to submit a loan mod to the bank like in the next few minutes. I offer to send him all of the docs that were already prepared for the no go short sale to him by email including the hardship letter. He gives me his email address and I sen him the information. Here is his response.

Most of the information you sent is irrelevant for my purposes.

However, I did look at your hardship letter and like the lender or servicer would do, I barely read beyond one third of the page.

Keep your hardship letter a maximum half a page long and straight to the point.

Like most loss mitigators, I have 10 to 12 clients and need to be efficient by filtering out clutter. I can only imagine what a lenders loss mitigator numbers are.

Be considerate, be efficient.

Here is the hardship letter that I believe I wrote using an example from this forum that received good marks.

To: Whom It May Concern

I am writing this letter to give you some reasons why I am unable to pay my mortgage. The answer is very simple. I don’t have the money to do so.

I understand that this letter will help you to decide if I deserve assistance saving my home. I cannot afford to enter into any type of deferral program or forbearance agreement as the current financial situation of my business has gotten worse rather than better. This is mainly due to the continued increase in costs associated with producing the food items I sell at my restaurant.

For months now I have struggled and tried to find a way to sell my house or come up with the money to catch up on my payments, but I have not been able to come up with any real way to do so. I have already received a personal loan for $112,000 from family to pay off the second mortgage on this home as well as other debts in an attempt to reduce my monthly expenses. The personal loan only helped for a short period as the losses from my business have continued to grow.

As you can imagine, ever since I began falling behind, I have been getting letters and phone calls from hundreds of people who say that they can help me. Some have wanted money from me and most were just “investors” who wanted to take my house and leave me out in the cold with some form of scheme or another.

Some have even tried to convince me to file bankruptcy to fight the foreclosure and I have spoken to an attorney to evaluate this option. I would prefer not to have to use such a drastic measure while the opportunity to work with your company is still an option. I would prefer to work out a friendly arrangement with your company instead of filing bankruptcy.

It has been explained to me and I understand that if we agree on a solution, we won’t have to go to court and fight over this and I’ll never have to file bankruptcy to fight the foreclosure.

Financially, I do not have the money to make up the back payments and I would like to avoid anymore hassles. I am embarrassed by this and sometimes I can’t sleep at night worrying about what will happen and it is eating me up inside not being able to pay my mortgage and having to go through this.

I have not been able to make enough money lately to pay my mortgage and I also have not had the money to keep the house maintained. I don’t have any alternative to foreclosure other than doing a loan modification or something similar that I can afford.

I still have to wake up every morning to go to work except now I have to look in the mirror and admit that I have failed financially. I am so sorry that I am in this position but with your help we can all work this out so we can avoid a long drawn out process. Please help me take a big step in getting my feet back on the ground.

I don’t understand why I have to write this kind of letter as it is really embarrassing. Believe me if I had my way I would be making my payments. It would be so much better than watching things go down this dreadful path.

I know that you may feel that I do not deserve any favors but doing something also helps your company as well as I know it works out better to work things out in a friendly way than by going to a bunch of court hearings and costly hassles.

I sincerely hope that something can be done and we can all move forward and put this matter behind us.

Sincerely,

Is this letter to long?

Does this HUD rep. seem to be interested more in the quantity rather than quality of help he gives to his customers?

Or is he right and I am just taking his comments the wrong way?

[Moe Bedard]

Hi HUDCRUD,


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

There is an example of a hardship letter in the Homeowner Tool Box to the left of the forum it is a bit different from what you have used here.............it would need to be shorter and to the point of what caused the hardship and that the hardship is now over if your brother wants to keep the property..........

The agent is correct........a lender will not allow a transaction amoung related parties to purchase a property that is short sale or in foreclosure............this is considered a non arms length bail out transaction. If you could just do a short sale to a relative on a house you can no longer afford, what would stop anyone from defaulting on a home they owe more on than is worth ... negotiating a short sale with a relative for much less, then buying it back at the discounted price? This is actually an up and coming type of mortgage fraud that lenders are not allowing and is also being looked into.

While the family member can buy the home for the total amount that is owed, they can not buy it for an amount less than what is owed therefore bailing it out.