When drafting a pre-foreclosure, include an outline of the circumstances that were beyond the debtor's control that let to his inability to make the mortgage payments, AllLaw advises. Hardship examples include job less, illness, natural disaster, medical bills and military service.Continue Reading
A hardship letter must contain as much information as possible about the circumstances that resulted in the inability to pay the mortgage, AllLaw explains. The letter should advise the lender how the circumstances arose and why the circumstance was beyond the debtor's control. The writer should express his intent to fulfill his financial obligations and advise why the lender benefits by extending the opportunity to allow the debtor to make himself current on the loan.
There are three types of loss mitigation that lenders generally consider: A loan modification, a short sale and a deed in lieu of foreclosure. Hardship circumstances are different in each case. A lender considers the amount of money the sale of the property could bring in when considering a short sale or a deed in lieu of foreclosure, or if there are other liens on the property, AllLaw notes. When considering a loan modification, the lender needs assurance from the debtor that he is able to fulfill the altered payment obligation.Learn more about Credit & Lending