In a story from Housing Wire

There’s a lot said about Mozilo, and his apparent mis-step, but the underlying concept of hardship letters need to be addressed.

If you are facing foreclosure due to circumstances out of your control, you need  hardship letter based on your circumstances, not a form letter you grabbed from the internet.  A hardship letter, along with supporting financial documents, is what allows a lender to understand your particular circumstance and why you feel you will not be able to continue making payments per your contractual agreement.

When there’s a job loss, or medical issues, or divorce that leads to a financial hardship causing home loan payments to fall behind, the lender can look at the original loan documents and the current financial situation and make a determination that yes, maybe this borrower can’t really keep up with their obligations.  A well written hardship letter will include the actual situation that caused the hardship.

Over the past few years, I’ve seen a huge increase in the number of websites and companies promoting themselves as workout/foreclosure specialists along with a huge increase in programs offering training in how to become a workout specialist.  There’s a page on this site  called Foreclosure Help that’s been on the internet since 1999.  It’s obviously not geared towards capitalizing on current market conditions, but provided as a starting point for those who need help.  There’s also links to assistance companies that have been around for the last decade or so, not new startups.

I understand the frustration of loan servicers when it’s difficult to determine a true hardship case if they are receiving boatloads of letters stating virtually the same thing.  That’s a little scary.  It almost sounds like I’m defending Mozilo.