What should we do?

I realize the mortgage company only cares about the money but this is a proposed hardship letter. Please read this and let me know what my options may be. We live in IL.
To Whom It May Concern:
Please accept this letter on behalf of my wife, our two children, and myself. We purchased what we thought was our “dream” home in October of 2005. We got a good deal on our home that we knew needed some work but as a handy guy, I could take care of it. Our home has many nice attributes and Lake Summerset has many amenities that we enjoy. We love being where we are. We have been blessed with wonderful friendships from our neighborhood, our church, and our son’s preschool.

Our son just loves his school and the friends he has made. As a family, we thought for sure that this is where we were supposed to be, but after everything that has happened to us which I will mention, we have no choice but to relocate.

Due to the housing market and construction industry, I was laid off from work quite a bit. I have been searching for a comparable job and picked up side jobs in the interim to help pay the bills. We struggled to make payments and resorted to making them with credit cards. We were using our credit cards to survive. We will be relocating to WI and will have to live with my wife’s parents.

Our dream home turned into our worst nightmare. It has been the worst 3 years of our lives and we must get out of it. The previous owner was very dishonest and did not disclose everything he knew about the house. Not believing in suing anybody, we looked for legal advice. We were steered away and the costs of services were way beyond our budget.

It started out with leaks in the basement, then in the three season room, then in the main roof. This in turn ruined the ceilings and saturated the drywall. I looked into repairing and got estimates from over 12 contractors who didn’t have a similar solution because of the way the house was built. The prices ranged from about 10000 to 50000 dollars. The home was built by and lived in by the seller. There are many issues that I became aware of after further investigation.

Due to income, we applied for the ILHEAP weatherization program. The man who came out declared our home a “money pit” and said whatever he does isn’t going to help much.

I have also found that Stephenson County does not have an inspector to make sure that builders are abiding by all of the building codes. This is exactly the kind of product you get when the building inspections do not occur.

We have looked into selling, however, there is no way we would be able to with the condition it is in. We have no equity either. I have done major improvements on the home and it may look nice but that is deceiving and I believe the home may be in disrepair. Due to the dishonest of the seller, lack of employment, lack of building inspections and failing housing market we are not able to pay for the mortgage of our home.

After seeking credit counseling, we started realizing what was really happening to us. We took action. We humbly resorted to state financial assistance for food and health. My wife quit school and we were forced to pull our son out of school as well. It has been very depressing, embarrassing, and emotionally frustrating being a father who can’t provide for his family due to reasons out of my control.

We are writing with hope that you have some solutions for us that will not destroy our credit. We want to avoid foreclosure and/or bankruptcy and salvage our credit. My credit scores have always been good and I know that a foreclosure on my record will affect me for years to come. I am asking that you please assist me in avoiding this. We just want to wake up from this nightmare, move on, and start all over.

I deeply appreciate your help and understanding in this matter. If you have any questions or need anything further from me, please contact me personally. I have previous owner’s address and the names of neighbors and previous renters who witnessed the issues. I have a list of the improvements to the property available upon your request.

That is a good letter!

But there is going to have to be some economic solution that makes sense.
You may want to have a builder or home construction expert give an opinion about what needs to be done, the costs, and can this be salvaged in an economic way with payments you can afford.

If not frankly it may be bestto just get out of it and start fresh--even with the credit score damage that will exist.