UTAH REAL ESTATE INVESTOR

John and Jane Homeowner
123 Myplace Avenue
Anytown, State 12345

Bob Lender
My Understanding Lender Company
456 Overthere Lane
Sometown, State 12345

Current Date

RE: Loan #(your loan number) for property at (address of property)

Dear Mr. Lender,

We are contacting you today to explain the circumstances which have caused us to become delinquent on our mortgage payments. Although we have done everything possible to improve our financial situation, we are still short on the money owed to you. We would greatly appreciate the opportunity to obtain a (proposed outcome).

The main reason we have become delinquent in our mortgage payments is (explain the reason here).

Our circumstances have (or have not) changed. As of (applicable date) we have (describe your change in conditions). At this time we do not have enough income to pay our regular monthly mortgage payment and all of the accumulated payments and fee. We truly want to pay what is owed, but at this time do not know how to accomplish this. Therefore, we are turning to you for assistance.

We are asking for (propsed outcome). Doing so, would help us get back on track. Our home means a great deal to us and we desire to work with you to keep it out of foreclosure. Please advise us of all options available to stop foreclosure (or initiate a short sale) at your earliest convenience. We are anxious to reach an agreement and appreciate your prompt response.

Respectfully yours,

Print name of Borrowers
Signature of Borrowers
Loan #
Phone
Email addresses (if applicable)

The following items are important and need to be included in your hardship letter:
• Date
• Loan Number
• Reason for Default
• Supporting evidence and documentation
- Event details
- Date of events
• Documents supporting end of hardship (if applicable)
• Your proposed outcome (what you would like to happen)

The following is a list of valid reasons for hardship that would be accepted by most lenders:
• Death of borrower
• Death of spouse or family member
• Illness• Medical Bills
• Short-term or permanent disability
• Unemployment
• Decrease in working hours
• Decline in earning for self employment
• Elimination of overtime or second job
• Mandatory pay reduction
• Increase of expenses due to short-term unemployment
• Involuntary job relocation
• Failure of business
• Divorce
• Marital Separation
• Incarceration
• Military Duty
• Damage to Property

When writing your hardship letter make sure that you honestly represent the facts as you may be asked for supporting documentation to verify your claims. Include all of the things you have done to be responsible for your loan obligations. For example:
• Created family budget
• Seeking credit counseling
• Reduced bills & recurring expenses
• Secured new employment
• Secured additional employment
• Used savings
• Borrowed or closed retirement accounts
• Increased education (more employable)
• Sold large assets
- 2nd car
- Jewlery
• Stocks, bonds, mutual funds
• Cancelled luxury subscriptions
- Magazines
- Cable TV, Internet
• Exhausted other means to pay debt

(Click here to see examples of some hardship letters)

The following paperwork is going to be required for anyone who is not able to sell the property (for more than is owed) and cannot pay the lender all of the money owed in back payments and fees:
•Hardship Letter
•Personal Financial Statement
•Authorization to Release Information
•Real Estate Purchase Contract (REPC)
•Limited Power of Attorney
•Seller Acknowledgement Document
•General Warranty Deed

In addition, the Homeowner(s) needs to be prepared to show copies of the following for each borrower:
•Tax Returns (past 2 years)
•Bank Statements for All Accounts (past 2 months)
•Pay Stubs for all Employment (past 2 months)
•All monthly bills (past 2 months)
•Property Tax Bill
•Homeowner’s Association (HOA) bills or liens
•Property Insurance statement

It is staggering how little help is really available to those facing foreclosure. An internet search for foreclosure help in Utah revealed 425,000 results for “foreclosure help utah” and yet there were only 4 true help resource pages in the entire first 10 pages of search results. Mostly there were sites aimed to attract investors to buy foreclosure lists and agents hoping for foreclosure listings.

The reality is that there isn’t much out there to really help someone facing foreclosure. Of the first 10 pages of search results there were just a handful of sites that talked about the foreclosure process. And in all those sites there wasn’t a single site that actually gave practical advice to someone seeking help for their current situation. Listed below are a few sites with some helpful information:

Understanding Homeonwer’s Options
Foreclosure Law Summaries (Utah)
Resources for Consumers (Federal Reserve)
Homeowner Information (HUD)
Foreclosure Education for Homeowners

If you know of any more good resources for homeowner’s facing foreclosure, please post a comment with the website information. Let’s pool our resources and help those who really need the help! Thank you in advance for helping those in need.

When an owner is facing foreclosure they often times don’t know that they have options available to them. Usually their list of options is to a) sell the house, b) refinance the house, c) wait for the inevitable foreclosure, or d) hope that nothing will happen, that it’s a bad dream that will go away if it’s ignored. I’d like to share a short list of options that a homeowner has available to them…

Have you heard about the new housing rescue bill that passed in July? One of the most exciting new provisions of the Housing and Economic Recovery Act of 2008 is the First-Time Home Buyer Tax Credit. The credit is designed to encourage first-time home buyers to go ahead and make the leap to purchase their first homes.

First Time Home Buyer Tax Credit Rules:

• The home must be purchased as a primary residence.
• You must not have owned a primary residence in the last three years. For couples, both individuals must not have owned a primary residence in the last three years.
• Must not be a non-resident alien as defined by the IRS in Publication 519.
• Individuals must have a modified adjusted gross income of less than $75,000 annually and couples less than $150,000 to qualify for the full amount.
• The home must be closed between April 9th, 2008 and July 1st, 2009.

How the tax credit works:

• The tax credit is 10% of the home’s sale price with a maximum of $7,500.
• You can claim the credit on taxes filed in 2008 or 2009.
• It’s a credit and not a deduction.
• It’s refundable, so if your tax liability is less than the credit, you can get the money back.

Tax Credit Loan Repayment Terms

The tax credit isn’t really a tax credit, it’s really just an interest free loan with some qualifications. You have to start paying back this loan within two years and you make equal payments over 15 years. When you sell your home, any profits will go first into paying off that loan. If you sell at a loss, the difference will be forgiven.

This tax credit (loan) along with the low prices and low fixed-rate loans make now the ultimate time to purchase your first home. For more information please call me at (801) 787-7797 or email me at khayyam@khayyamjones.com.

The foreclosure cycle is different in every state. Some states are Judicial states (which means that the foreclosure process is a lawsuit that goes through the court system)and other states are non-Judicial states (not involving the court). In general the western states use a non-judicial foreclosure process and the eastern states use a judicial foreclosure process.

While each foreclosure process is slightly different the basic processes are the same. A foreclosure process begins with 3 causes: 1) non-payment of the agreed installment payments and fees, 2) non-payment of property taxes, or 3) lapse of adequate property insurance (although some sort of forced-placed insurance is usually the first remedy for inadequate insurance). Next, some sort of notice of default or demand for payment letter is filed and sent to the mortgagee. There is a period in which the loan may be reinstated and brought current, generally between 15-90 days (depending on the state). Ads must be posted in public places, usually a local newspaper, and a notice is placed on the property announcing the sale of the property at a public auction (trustee sale). And finally, there is the actual sale of the property.

Here is a quick summary of the 4 basic foreclosure cycles:

1. Non-Judicial Foreclosure Cycle (120 days)

• Day 1 – Notice of Default (NOD) is filed
• 90 day reinstate period begins
• Day 90 – Ads are posted in newspaper & certified notice sent to property
• Notice is posted on property
• Day 120 – Trustee Sale

2. Non-Judicial Foreclosure Cycle (90 days)

• Day 1 – Notice of Default (NOD) is filed (aka Notice of Action, Notice of Trustee Sale, Notice of Sale)
• Day 1 – Ads are posted in newspaper & certified notice sent to property
• 90 day reinstate period begins
• Day 90 – Trustee Sale

3. Non-Judicial Foreclosure Cycle (21 days)

• Day 1 – Notice of Default (NOD) is filed (aka Notice of Action, Notice of Trustee Sale, Notice of Sale)
• Day 1 – Ads are posted in newspaper & certified notice sent to property
• 21 day reinstate period begins
• Day 21 – Trustee Sale

4. Judicial Foreclosure Cycle (3-6 months)

• Day 1 – Attorney sends “Demand Letter” (Pay in 10 days)
• Day 11 – Lis Pendens suit is filed
• Day 40 (- 90) – Court date, attorney gets judgement
• Day 50 (- 120) – Debtor has 10 day Right to Appeal
• Day 60 (- 160) – Ads are posted in newspaper (30 days)
• Day 90 (- 180) – Foreclosure Sale
• (Timeframes vary due to court availability)

It is important to realize that these are just general guidelines and minimum timeframes. Sometimes these foreclosure times can be longer depending on the trustee’s work load, court availability and negotiations with the debtor/mortgagee. It is important that you always seek competent legal counsel in the state you live in if you’re facing a foreclosure action. There are many legal and financial ramifications to this process.

*It is important to understand that the foreclosure process does not automatically eliminate the debtor’s obligation to repay the debt. The foreclosure is a process by which the lender tries to sell the property (that was promised as collateral) to satisfy the debtor’s obligation. If the property sale does not satisfy the loan obligation then the lender may, at the lender’s sole option, pursue other legal means to collect the balance of the debt. In the current market this option isn’t being pursued as aggressively but the lender still has the right to try and collect the full amount of the promised loan.