So, you’re dealing with a tough spot and need to write a hardship letter? Maybe you’ve hit a rough patch financially and can’t keep up with your mortgage. It happens, life throws curveballs. But guess what? Writing a mortgage hardship letter could really help you out. This letter explains your financial hardship and lets your lender know that you’re struggling. In turn, you might get some mortgage relief and, hopefully, avoid more trouble down the line.
The main goal here is to secure some help, whether that’s a loan forbearance, repayment plan, or even a loan modification. If you’re looking for ways to avoid foreclosure, this letter is the first step.
Now, let’s break down how you should write it. It’s not as complicated as it seems.
What Is a Hardship Letter?
A hardship letter is a formal letter you send to your lender when you’re unable to make your mortgage payments because of a financial hardship (2). This could be due to job loss, illness, or any other event that has impacted your finances unexpectedly. The goal of the mortgage hardship letter is to ask your lender for mortgage relief, like loan modification or loan forbearance, which can give you some breathing room and prevent foreclosure. This letter shows your lender that you’re serious about resolving the situation and want to keep your mortgage in good standing. It should focus on the facts, be professional, and include proof of hardship, like medical bills or proof of unemployment. Avoid emotional pleas and keep your letter focused on explaining why you need help and what kind of assistance you’re requesting.
Why You Might Qualify
People hit financial bumps for all sorts of reasons. Maybe you lost your job or had a major medical emergency. Maybe it’s something else. Lenders understand these things happen, and they have ways to help, but you’ve got to ask. You can send a mortgage hardship letter when you’re dealing with:
- Job loss or income cut
- Illness or injury
- Divorce or separation
- Death in the family
- A natural disaster that damaged your property
- Military deployment
- Long-distance job transfer
Any of these could justify writing a letter and asking for some mortgage relief. But it’s important to contact your lender right away—don’t wait until it’s too late, and you’re staring down foreclosure.
Mortgage Relief Options You Can Request
So, what can you ask for in your mortgage hardship letter? Let’s go over some options, but keep in mind that not every solution works for everyone. Depending on your situation, you might need to explore one or more of these:
- Loan reinstatement: Catch up on your missed payments all at once, and resume your regular mortgage schedule. This works if you just needed a bit of time to gather the funds.
- Loan forbearance: This lets you pause or reduce your payments for a limited time. It’s helpful when you know you need a temporary break.
- Repayment plan: Instead of paying everything you owe at once, you increase your monthly payments for a while until you’re caught up.
- Loan modification: Your lender may adjust your mortgage terms to lower your payment. This is more of a long-term fix.
- Short Sale: If you’re underwater on your mortgage and can’t afford the payments, you might be able to sell the house for less than what you owe, with the lender’s permission.
- Deed in lieu of foreclosure): This is a way to avoid foreclosure by handing over the deed to your house instead of going through a full foreclosure process.
You’ll want to be clear about what you’re asking for in your letter. If you need a loan modification, say so. If a repayment plan makes more sense for your situation, explain why.
Writing the Letter: Step by Step
Here’s how you can write your mortgage hardship letter:
1. Introduce Yourself and Your Situation
Start with a simple intro: your name, your mortgage account number, and why you’re writing. Let your lender know the basics of your financial hardship right away.
Example:
“My name is Alex Smith, and I’m writing to request mortgage relief for my home at 789 Maple Street. After losing my job last month, I’m struggling to keep up with my mortgage payments.”
2. Explain the Hardship in Detail
Next, lay out the details of your financial hardship. Be specific. Did you lose your job? Have a medical emergency? Avoid going too deep into emotions, though; stick to the facts.
3. Give a Timeline
Tell them when your financial hardship started, and how long you think it will last. This will help your lender get a clearer picture of what’s happening.
4. Request Specific Mortgage Relief
Be clear and direct about what you’re asking for. Whether it’s loan forbearance, a loan modification, or something else, make sure your lender knows exactly what type of help you need.
Example:
“I am requesting a loan modification that would lower my monthly payment and allow me to stay current on my mortgage.”
5. Explain How the Relief Will Help
This part is important. You need to show the lender how the requested mortgage relief will allow you to get back on track with your payments. You want to show that this isn’t a permanent situation.
6. Attach Proof of Your Hardship
Lenders need proof of hardship to consider your request. Include all the hardship documentation you have, like bank statements, termination letters, or medical bills. This will support your case.
What Shouldn’t You Include in a Hardship Letter?
When writing your mortgage hardship letter, avoid including unnecessary emotions or blaming anyone for your financial struggles. Stick to the facts of your financial hardship rather than focusing on the emotional toll it’s taking on you. While it’s tempting to appeal to a lender’s compassion, they are primarily interested in the financial details that explain why you can’t make payments. Avoid venting frustration or anger at the lender, as it won’t help your case. Additionally, don’t make unrealistic promises or mention potential funds from family or friends. Focus on your real situation, what’s going wrong financially, and how specific mortgage relief (4) options like loan forbearance or a repayment plan could help.
Which Situations Qualify as a Hardship?
A financial hardship is typically, something beyond your control that significantly impacts your ability to make mortgage payments. Common qualifying events include job loss, illness, divorce, or the death of a family member. Other examples are a major injury, unexpected medical bills, or natural disasters that damage your property. In these cases, a mortgage hardship letter can help you access options like loan modification, loan reinstatement, or deed in lieu of foreclosure. However, things like overspending or voluntary income reduction may not count as valid hardships. The key is demonstrating that your situation is genuine and that the hardship is making it impossible for you to keep up with your payments.
What Does a Strong Hardship Letter Look Like?
A strong mortgage hardship letter is clear, concise, and sticks to the facts. It should explain your financial hardship, provide context about how it started, and describe what you’re requesting, such as loan forbearance or a repayment plan. The best hardship letters stay professional and factual, without veering into emotional appeals or assigning blame. Make sure to include proof of hardship by attaching documents like bank statements or medical bills to back up your claims. End the letter by clearly explaining how the mortgage relief (4) you’re asking for will help you get back on track and avoid foreclosure. A well-organized, respectful tone will strengthen your case.
The Bottom Line
At the end of the day, writing a mortgage hardship letter is about taking control of your situation and asking for the help you need. Lenders are more likely to work with you if you’re upfront and transparent about your financial hardship. By following the steps of clearly explaining your hardship, providing the necessary hardship documentation, and requesting a specific solution like a loan modification or loan forbearance, you can increase your chances of getting the mortgage relief that will keep you from falling deeper into trouble. Acting quickly and sending a well-prepared letter could be the difference between staying in your home and facing foreclosure.
FAQs:
1. What is a mortgage hardship letter?
A mortgage hardship letter is a letter you write to explain your financial hardship to your lender and ask for mortgage relief.
2. What options can I ask for in a hardship letter?
You can ask for loan forbearance, loan modification, repayment plan, or even a short sale, depending on your situation.
3. Will writing a hardship letter help me avoid foreclosure?
Yes, writing a mortgage hardship letter early can help you avoid foreclosure by securing financial assistance.
4. How long should my hardship letter be?
Keep it short and to the point—usually about one page is enough.
5. What proof should I include with my hardship letter?
Include proof of hardship like bank statements, medical bills, or termination letters to support your claim.
Resources:
- Forbes. “https://www.forbes.com/advisor/mortgages/how-to-write-a-hardship-letter/
- Consumer Financial Protection Bureau. “https://www.consumerfinance.gov/ask-cfpb/how-does-foreclosure-work-en-287/
- Experian. “https://www.experian.com/blogs/ask-experian/how-to-write-hardship-letter-to-creditors