Archive for category: Hardship Letter

Effective communication is the single most important aspect of describing hardship issues in your hardship letter. Many modification requests fail because the homeowners can not tell their story in a simple way. It is easy to forget there is a real human being analyzing the hardship letter within the lender’s or servicer’s loss mitigation department who is responsible for determining the existence of a real hardship. With that said you must keep your hardship letter simple and get to the point quickly.

Loss mitigation departments are overwhelmed with foreclosures, short sales, and modification requests. They do not want to read a ten page letter regarding the loan officer who put them in the loan, why they bought the house, the memories they have had there and why they want to keep their home. When writing the hardship letter, keep the letter simple and to the point. In addition, handwrite the hardship letter. The fact is that people personally relate to handwriting more than a typewritten letter and this includes the lender’s or servicer’s loss mitigators. What follows on the next pages are perfect examples of sample hardship letters, a financial worksheet, an income and expense worksheet, a sample loan modification request and a sample stacking order for you to use. Notice as well that on the loan modification request and on the sample stacking order for a loan modification you will need to include documentation of your home’s value. You can obtain reliable documentation of your home’s value from a local Realtor, Title Company or from an appraiser.

Sample Hardship Letter : Using the forensic mortgage loan document audit as basis for pressuring lenders, you will move lenders to take immediate action to stop an impending foreclosure and keep your home safe and place yourself in a better financial situation. This audit reveals various federal and state violations or errors in the original loan documents. Our internal auditing statistics show that four out of every five loans we have audited have significant violations.

In the beginning of the process you will need to send your lender a Qualified Written Request (QWR). The QWR is a formal demand that the lender must comply with under federal law to produce copies of your loan documents within a specified timeframe. Once you have collected all of the required documentation from your lender you can proceed to perform a forensic loan audit. Sample Hardship Letter

Once the audit has been completed and if violations are found a formal request for a loan modification is sent to the lender along with an abundance of highly organized financial information that makes the best case possible as to why you (a) deserve a loan modification and (b) can afford the new payments. This is a long process that requires patience and negotiation skill.

It’s no secret that the IRS doesn’t shy away from assessing penalties for every single offense that can be possibly thought up by the human imagination. While the IRS can be ruthless in assessing these penalties, many times, the IRS will not be sticklers about enforcing them. Dare I say they may even be somewhat reasonable about it, given plausible justification of the violation. The only way to know how committed the IRS is to charging you the assessed penalty is to ask them.

This may be easier said than done. You may sit down to pen a beautifully crafted letter and get as far as “Dear IRS” before your writer’s block makes a bold and unashamed appearance. Now what? Should you be forthcoming with details? What types of things are the IRS looking for? Is there a particular department you should be writing to or do you have a case worker you should contact? Do you need a doctor’s note or your hospital records? Do you need pictures of your damaged home from the hurricane or insurance records? Will the IRS be able to use any of your information to assess you further or worse yet, audit you?

Before you sit down to spend your valuable time on a letter to the IRS, take a moment to examine the pertinent details you intend to present to them to determine the feasibility of your request.

Did you file your return or pay your taxes on time and this is an error?

You should request a penalty abatement. Skip ahead to Sample Letter.

 

Were there circumstance outside of your control (i.e. car accident, serious illness, no access to your records, bad tax advice from a professional or the IRS) that prohibited you from filing returns or paying your taxes?

You should request a penalty abatement. Skip ahead to Sample Letter.

Were you too busy to hire someone to do your taxes or do them yourself? Did you expect to owe money to the IRS that you wouldn’t be able to pay so you put off the filing of your returns? Did you simply forget to file your returns?

These are not considered reasonable causes and your chances of obtaining a penalty abatement are slim.

You may have further questions about what the IRS would consider reasonable cause. Do not hesitate to contact a tax professional you trust to discuss these details. An Enrolled Agent is the highest credential the IRS bestows upon tax professionals. Find one that has no complaints and an A+ rating at the Better Business Bureau to further discuss your circumstances.

Below is a sample letter and breakdown of the components of a competent letter to the IRS about abating your penalties.

Sample Letter

 

January 1, 2012

 

 

 

Internal Revenue Service

Penalty Abatement Coordinator

Address

City, State, Zip

 

Re: Penalty Abatement

Ima Taxpayer

Address

City, State, Zip

SSN

Tax Year: 20??

Notice #

I have been assessed a penalty in the amount of $2,345.67 (please refer to enclosed notice # for details).

 

The penalty was assessed for (insert offense here i.e. unfiled taxes, unpaid taxes, etc). I was unable to (insert proper action here i.e. file my returns, pay my taxes on time, etc.) due to (insert reason here i.e. disability, serious illness, etc.).

 

Describe the nature of your hardship here. For example, if you were disabled, include details such as the nature of your disability, the severity of your disability, and the dates of your disability.

 

Explain how your hardship prevented you from the proper action that the IRS is penalizing you for. Explain how other obligations were impaired (i.e. inability to pay other bills, inability to care for your children, etc.)

 

Please find enclosed documents to further explain my (insert hardship here).  The documents to enclose would be doctor’s notes, police reports, death certificate, pictures – anything to help the IRS agent fully understand your inability to file your returns or pay your taxes.

 

In light of the above information, I ask that you consider an abatement of my penalties for reasonable cause. If you have any further questions, I encourage you to contact me directly at (insert phone number here) or (insert email address here).

 

Thank you for your time and consideration. I look forward to your response.

 

Sincerely,

 

Sign your name in ink pen here

 

Type your name here

 

 

 

Other Things To Consider

Do you need to file your returns or pay your back taxes before submitting a request for penalty abatement to the IRS? A hardship isn’t black and white. Would your situation constitute a hardship? How can you tell if the IRS made a mistake on your assessments and therefore you’re due a penalty abatement? It would serve you well to speak with a reputable Enrolled Agent before sitting down at a desk to formulate your written plea to the IRS for a penalty abatement.