Hardship Letter Any Business Relationship,

Hardship Letter Any business relationship, whether it involves a bank, an employer, a neighbor or any other entity, should be entered into with a certain amount of trust on the side of both parties. A mortgage agreement should be no different. The mortgage company trusts that a consumer who enters into a loan agreement will make the payments he has agreed to, while the consumer trusts that the mortgage company will fulfill the terms expressed to him via the mortgage representative.

When I refinanced my home with your company a couple of years ago, I placed a certain amount of trust in your representative that he would do his job appropriately, and that was to offer me a better loan package on my $331,000 loan. Throughout the loan application process and even into the closing, your agent told me that I was obtaining a 30-year loan, fixed at a rate of 7% on the principal and interest of my mortgage.

Since this is my first home, I was not aware of how important it was to verify each and every piece of information that was given verbally to me by the representative, even to the point of not questioning an excuse at the final signing of a "broken copier…the copies will be mailed to you." Again I reiterate: the present terms of the mortgage are NOT the same as the terms given to me by your agent at the time of the closing, and I now know that what is written into the actual mortgage papers is NOT what he claimed it was.

Because of my upbringing and being raised in a family of missionaries, I have always strived to be a trustworthy citizen, and I expect the same from those people that I come into contact with. However, I have now learned that trusting a professional lending source's agent may very well have been the most monumental mistake I have ever made when it comes to my financial future. Please allow me to clarify why I am writing this hardship letter in the first place.

A series of unforeseen financial events have placed me behind on all my debts, and I have taken on a second job to maximize my budget in every way. Furthermore, I have recently suffered a physical injury that temporarily kept me from working, and even though I am back at work full time, I have fallen so far behind on payments to creditors that I am in an endless cycle of late fees.

Finally, I have had a series of unfortunate problems with my home itself that have required immediate repairs and are going to incur future expenses of an unknown amount to remedy. I have been employed for the past two years as an electrician at the Los Angeles County Sheriff's Department, and have had a steady income. Prior to obtaining this employment, I could not find a job and had to draw out all of my savings and retirement accounts.

When savings were depleted, I resorted to using credit cards to pay basic expenses, and over the period of about six months, I incurred a large amount of credit card debt. Since obtaining employment at the Sheriff's Department, I have not been able to pay back or even reduce that debt since I can barely make the minimum payments on the credit cards.

As I stated, I acquired a second job as an instructor at ETI to supplement my income, but due to the poor economy, student enrollment has been significantly reduced, instructors' hours have been cut or eliminated, and my secondary income has become almost nonexistent. I am still on the payroll at ETI as a substitute teacher, but have not earned any income from this position since October 2008.

As I mentioned above, my financial situation weakened further when I received a letter from your company stating that my loan is actually an adjustable rate loan, and that my rate had increased from 7.5% to more than 9%. In order to try and keep my mortgage payment current, I stopped all payments to my credit cards so that I could continue to uphold my payment agreement with your company. Because of this, my excellent credit rating has been destroyed and I am actually going through the process of Chapter 7 Bankruptcy.

While I have hope that filing for Chapter 7 Bankruptcy will offer some respite for my credit card debt, it does not provide a solution to another financial problem that I am being faced with: student loans. My loan repayment began effective May 1, 2009 in the amount of $609.07 per month. I do not have the resources at this time to make this payment, and am falling farther and farther behind. I am truly over extended financially and do not see myself avoiding foreclosure without some help from you.

I cannot continue making mortgage payments that are at 100% of my current income. To add to my growing list of financial troubles, I was the unfortunate victim of an accident where an unknown driver ran through and destroyed my garage door. Since I could not leave this condition unrepaired due to security reasons, I was forced to pay out of pocket expenses totaling $1,200 for repairs. Shortly thereafter, the hot water heater leaked and I had extensive flooding throughout most of my home.

I spent $1,600 on replacing the old water heater and having the place professionally cleaned to hopefully avoid mildew. There are still walls missing drywall where the old water heater system was removed in order to run new drain lines, and I do not know when I will have the money to complete the repairs. Shortly after this mishap, the air conditioning condensation line became backed up and I again had flooding issues.

Being located in a seldom-used area of my home, by the time I suspected the problem, the damage was quite extensive and there is a very real possibility that mold could be growing inside my home. I spent another $600 on water backup removal and repairs to the line, but I still have not had all the carpeting replaced, and do not know when I will be able to do so.

These repair problems were all going on while I was physically unable to work because of a medical problem with my foot. Without income for this period of time, I was forced to stop making my mortgage payments. Furthermore, I am now facing repair problems and future costs to my vehicle, which I use to get to and from work. On my own, my financial options are bleak.

I do not have the option at this time of selling my home because my mortgage balance is approximately $331,000 and my home is currently only worth $146,000, or 44% of the loan balance. I would hope that my home will regain some of its value in the future, but at this time it is not practical for me to sell it, especially while portions of the house are still in a state of disrepair, making it unmarketable.

Furthermore, refinancing is basically a nonexistent option for me since my credit score has dropped from 740 to 501. I am asking you to work with me to find a solution to my financial problems that will enable me to keep my home. After doing extensive research, I have come across several options that may allow me get back on track in meeting my financial obligation with you.

First, under some of the new Obama federal housing relief plans, some mortgage companies are recommended to do the following: "make modifications which extend the term of the mortgage, provide for re-amortization of the outstanding debt, change adjustable-rate mortgages to fixed-rate mortgages, capitalize delinquent interest and escrow items or advances, and/or reduce the existing interest rate to the current market rate or to a below-market interest rate." I found the details to this program in the Servicing Guide Part VII: Delinquent Mortgages; Chapter 5, Loss Mitigation Alternatives; Section 502.02: Modifying Conventional Mortgages, published by Fannie Mae.

For more information, see Servicing, p.1. Secondly, I believe the program best fit for my unfortunate situation is the Hope for Homeowners Act. As a part of this legislation, the Affordability vs. Value program would reduce my mortgage loan to 90% of the property value, or $131,400. This home loan modification program would result in more affordable payments for me and definitely help us avoid a possible property foreclosure. As you already know the details of.