HAFA Short Sale Hardship Letter

Homeowners who want to sale their homes may consider a short sale if they do not want to go into foreclosure. The bank will be accepting less than what is owed and may not approve this type of sell.

It is required that the borrower submit a short sale hardship letter explaining why they are unable to continue to make their mortgage payments. Its best to have a sales agent who specializes in short sales to help you provide all the necessary documents to the lender.

Some of the components that need to be included in the short sale letter are any life changing situations. You will need to include your present conditions in the following areas such as unemployment, reduced income, new job, spouse loss of job, pay cut, Illness or medical emergency, job transfer, divorce, separation or marital difficulties.

Other things that the loss mitigation department may consider is an adjustable rate mortgage terms, Military service, death in the family, Incarceration, Increased expenses and excessive debt, or any unexpected repairs or home maintenance.

Short Sale Hardship Letter for Financial Hardship Help

The purpose of the letter is to let the bank know that you want to sell the home, avoid foreclosure and salvage your credit. These are concrete enough for a response to your inquiry.

Those who are unable to keep mortgage payments current can choose a short sale as an alternative to foreclosure or bankruptcy.

It is necessary for you to send a plea to the lender and ask them to accept less than what is owed especially if you have a buyer for the property.

You will want to provide your name

As well as your address

Then list your lenders name

Don't forget to include your loan number

Address the letter To Whom It May Concern:

Start out by explaining why you are writing the letter, then give a example of the unfortunate set of circumstances that has caused you to become delinquent on your mortgage.

It is important to emphasize how you have done everything that you possibly could to make ends meet but even after all of that you have still fallen short.

the goal is to get help and see if your lender will consider working with you to modify our loan. You also want the bank to know that you want to come to a mutual agreement to keep your home.

The next thing the bank will want to know is the main reason you have become late, then explain your income situation. If you are not earning enough to pay your bills include that information in the letter.

Also make it clear that it is your full intention to pay what you owe. Once the lender knows that you are at the end of your rope and you are needing their help it will be clear that you are in a hardship.

Next include the approximate date that you feel is when you have reached this low point, if you think it is just a temporary situation let it be known. If you feel that a loan modification would benefit you then ask to have the delinquent amount reduced, and how you want to work with them to resolve this issue.

Then conclude the letter with your sincerity let them know you would like to get this settled and thank them for the opportunity to present your case to them. 

Then sign the letter.

It has been said before that words can paint a picture, so your job is to give the reader of your letter a full blown visual of your dire situation. They need to feel your pain and understand why this is your totally last resort.

Remember that in order for you to sell your home in a short sale you will have to stand out from the crowd. Their are may homeowners underwater, so the banks have seen thousands of hardship letters come across their desks. So what will you need to do to get your point across?

Well it just may take some learning on how to write the best financial hardship letter you can. Online you can find several tips on how to compose and set the stage for the story of your life. See the person reading your letter does not know you at all. They have no vested interest in your situation. So it is important to get them to work with you on your case.

Many suggest that the letter be a factual financial description of the events leading up to the last resort of why if they do not get help as soon as possible they will enter into foreclosure. It is recommended that the borrower write the letter in their own words.

Also everything that is mentioned needs to be followed up with documentation such as pay stubs, medical bills, or even job layoff forms. The ultimate goal is to show that the current financial situation is beyond repair.

Studies show that your hardship letter should include the following things, first of all how you got into your present situation, as well as what you have done to try to get out of this situation along with why this situation is permanent.

The goal of many homeowners is the opportunity to transition to affordable housing while alleviating the mortgage debt they owe. It was not long ago that Fannie Mae released a servicing guide announcement that introduced the Fannie Mae's Home Affordable Foreclosure Alternatives Program. This is supposed to help servicers with guidance and direction on how to use the short sale process for borrowers who qualify.

The expansion of the HAMP offers incentives for servicers to allow short sale as an option for homeowners who find themselves in default. Those who have not yet setup a loan modification can avoid foreclosure through the HAFA. The benefit of participation is that the homeowner can save the negative effects on their credit.

For buyers and sellers of short sales there are financial incentives for participation in the program include a servicing bonus for lenders and a relocation bonus for displaced homeowner. One can see how these incentives give investors as well as mortgage servicers, an attractive reason for completing a short sale or deed-in-lieu of foreclosure for a borrower who is underwater.

For homeowners to participate in this type of program they must not qualify for a trial mortgage modification under the Making Home Affordable Program or have not completed the trial period for the modification. Other factors would be that at least two consecutive payments have been missed during the modification period.

Home Affordable Foreclosures Alternatives Program: Guidelines and Forms

You can download servicers documents and the HAFA Data Dictionary. Along with the HAMP Compensation Matrix.

Some of the borrower documents include: Short Sale Agreement (Exhibit A), Request for Approval of Short Sale (Exhibit A1), Alternative Request for Approval of Short Sale (Exhibit B) and Deed-in-lieu of Foreclosure Agreement (Exhibit C)

A Summary of HAFA Provisions

According to Realtor.org the following financial incentives to cover the borrowers relocation assistance, as well as funds to cover the servicers administrative and processing costs. Then if investors allow short sale proceeds to be distributed to subordinate lien holders, on a 1 for 3 matching basis.

Apparently prospects who are eligible for HAMP loan modification, their hardship information can be used for a pre-approved short sale, allowing them to be released from the liability of the first mortgage debt before the listing of the property takes place.

Get more detailed information about guidelines for participation at the Fannie Mae Website.