First brainstorm about your hardship. Sit down, and write down every idea that pops in your head about why you can’t afford your house. Why are you having financial difficulties. Loss of job, medical bills, increased property taxes, child’s college education tuition, divorce, credit card debt, etc. Write every possible thought that has any affect on your financial situation or your wanting to negotiate some kind of loan modification with Washington Mutual. It doesn’t matter what you write down. Don’t think too much, just write whatever pops in your head. Sit and write until you have at least 5 ideas. If you don’t have 5, you’re thinking too much. Just write whatever pops in your head.
Now look at your hardship letter brainstorm list and pick the most obvious ones that have the most affect on your financial situation and ability to make payments on the home. Look at the list as if you were Washington Mutual, or your specific bank. Which hardships would you look at as the most crucial? Once you select 3 or 4 hardships, focus on them and explain exactly why they are affecting your ability to make payments on the loan. (For example: I was laid off on Sept. 27 and as a result, my monthly income has decreased by $2,100.)
Now you’re ready to begin writing and putting together your hardship letter for WaMu. Rule # 1, make your hardship letter less than one page paragraph form. Loan modification or mortgage loan workout department reps look through many letters. They don’t want to be reading a novel to find out why you can’t afford your mortgage payments.
Line 1: At the top of the hardship letter type Washington Mutual, or your bank’s name that you are requesting the deed in lieu from. Line 2: put their address. Line 3: type their phone number and fax number. Skip a space. Line 4: type the date. Line 5: type “RE: Request for deed in lieu – (Your Loan # and Property address).” Skip a line and start your letter with: “Dear (Washington Mutual or Bank’s Name) Representative:”
First paragraph: State a change. Mention what change took place why you can no longer afford your payments to Washington Mutual. Keep it brief and simply let them know that some change happened between the time you bought the home and now which has affected your ability to pay your mortgage loan. Ex: “There has been significant changes in in my financial situation since I purchased my home in October 2001.”
2nd paragraph: State why your area is bad. Ex: “My property is located in ______ town. The taxes have increased, property values have declined, there are 5 foreclosures on my street, etc.” List any bad circumstances for your specific location that support your case for a loan modification or short sale, etc.
3rd and or 4th paragraph: List any of the following and explain using details and specific numbers as best as you can such as: wrong doing by mortgage loan broker, bad adjustable mortgage loan on the property, hardships (income I depended on is no longer available, increased bills, inability to work due to health or disability, etc. – from your brainstorm list).
Final paragraph: Clearly state that you “cannot pay” and need to negotiate some kind of modification or change to your mortgage loan with Washington Mutual. You don’t have any other options available. Leave your contact info or your agent’s contact info if they require further information. Sign, date, and give to your agent, attorney, or bank. (See warnings below)
Tips & Warnings
- Be wary of some negotiating companies that charge an upfront “application or processing fee.” Some of these companies charge $999 upfront to desperate homeowners with promises of negotiating a short sale, deed in lieu, loan modification, or some other solution between you and your bank, with no actual results.
- There are some very good free or low cost services available to upside-down homeowners to help you negotiate with your bank and avoid foreclosure.