Write a Letter That Will Save Your Home

One of the most important items your servicer or lender will require during the loan modification process is a letter of hardship. Simply put, a letter of hardship is an explanation as to what has transpired which has caused you to fall behind on your mortgage. This letter is significant as it will lay out the foundation for why you are no longer able to meet your financial obligations and it is vital in helping you achieve a loan workout.

We recommend that you try to keep this letter between 1 or at maximum 2 pages, keeping in mind that the current foreclosure and banking crisis has created a large backlog for most financial institutions.

Below are examples of hardships that lenders take into consideration when analyzing loan modification requests:

Payment Shock (Adjustable Rate Mortgage Reset)
Loss of Job
Reduced Income
Failed Business
Job Relocation
Divorce
Death of Spouse or Co-Borrower
Illness
Incarceration
Military Duty
Medical Bills

We have provided some templates for you to help you get started. However, your letter of hardship needs
to be unique to your particular situation.

These are some of the questions you need to address:

What event(s) has caused your financial hardship?

What was the term of your hardship? (When did it begin? Has it ended?)

What was the financial impact of your hardship? (Estimated expense of hardship, income lost during hardship,

How long have you been with your currently employer? Are there any foreseeable changes in your employment?

How long have you lived at the property? Why do you want to keep the property?

What actions have you taken thus far to resolve your financial situation? (E.g. obtained additional employment, reduced optional monthly household expense such as cable & Internet service, etc

Name: (Your Name)
Address: (Your Address)
Lender Name: (Your Lender)
Loan#: (Your Loan #)

To Whom It May Concern:

I/We are writing this letter to explain an unfortunate set of circumstances that have caused us to become delinquent on our mortgage. We have done everything in our power to make ends meet but unfortunately we have fallen short and would like you to consider working with us to modify our loan. Our number one goal is to keep our home and we would really appreciate an opportunity to do that.

The main reason that caused us to be late is (insert reason here, keeping it short and concise). Soon after being late and our income not being nearly enough, we had fallen further and further behind. Now, it's to the point where we cannot afford to pay what is owed to (lender). It is our full intention to pay what we owe. But at this time we have exhausted all of our income and resources so we are turning to you for help.

(The approximate date of hardship and we believe that our situation is Temporary or will be Permanent.)

Our situation has got better because (reason here) and we feel that a loan modification would benefit us both. We would appreciate if you can work with us to lower our delinquent amount and/or payment so we can keep our home and also afford to make amends with your firm.

We truly hope that you will consider working with us and we are anxious to get this settled so we all can move on.

Respectfully,

__________________ Date _________
Borrower's Signature

_________________ Date __________
Co-Borrower Signature