Examples of a Hardship Letter

[Moe Bedard]

One of the items your lender or servicer will ask for during the loan workout or loan modification process is a hardship letter. A hardship letter is a written explanation as to what “event” has caused you to fall behind on your mortgage and it vital in helping you stop foreclosure.

This letter acts much like an outline or biography of your current “life” issues that are affecting your ability to meet your financial obligations.

Please keep in mind that your are composing the hardship letter for your lender or servicer and because of the foreclosure crisis, they are extremely busy and back logged. So, with that in mind, do not write a book because most likely it will not get the attention of an over worked, $12 an hour loss mitigation employee. Keep it short and to the point. Usually 1 or at maximum 2 pages is more than enough to get your point across.






Here is an example list of hardships that lenders consider during the loan workout process:

• Adjustable Rate Mortgage Reset- Payment S**** (uncommon, but we will see more lenders accept this in the future)
• Illness
• Loss of Job
• Reduced Income
• Failed Business
• Job Relocation
• Death of Spouse or C0-Borrower
• Death
• Incarceration
• Divorce
• Marital Separation
• Military Duty
• Reduced Income
• Medical Bills
• Damage to Property (natural disaster or unnatural)
• Other (Please Specify)

Now that you understand what your lender or servicer is looking for, it’s time to sit down and write a hardship letter. I made it easy for you by giving you a couple templates below that you can use as a boiler plate for your own letter. Make sure you make it unique to your situation.

Remember that your hardship letter is only one piece of the loan workout process, but key in helping you avoid foreclosure. You will still need to jump a few hurdles with your lender before they will approve you any kind of work out plan.

Example Harship Letter:

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

To Whom It May Concern:

I am writing this letter to explain my 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 the opportunity to do that.

The main reason that caused us to be late is (insert reason here and don’t be too lengthy and long winded) 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 or delinquent amount owed 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.

Sincerely and Respectfully,

Borrower’s Signature
Date
Co-Borrower’s Signature
Date

Hardship Letter Contributed by LoanSafe.org Forum Member September 7, 2007 To: Countrywide Mortgage account # 058989482
Re: Mortgage modification program

Due to the recent adjustment to the mortgage I currently have with your company, I am finding it very difficult to afford the new payment. I have a 3 year fixed rate which is now adjustable and is schedule to adjust again in Feb. 2008.

Considering my current income, there will be no way I can afford the increased payments come February. Hopefully there is way to renegotiate the terms of my current mortgage to avoid default and help stop foreclosure on my home.

Is it possible to have my current adjustable rate mortgage converted to a fixed rate? If this is not possible can the next rate change be postponed to a future date to allow me to hopefully refinance. Any other solutions you could provide would be greatly appreciated.

I have had no problem making my payments for over three years now and do not want that to change. My mortgage was originally written by another company and bought by Countrywide. The original mortgage terms are terrible but it was the only loan I was qualified for at the time. I was assured that refinancing would be no problem but that turned out not to be true due to the downturn of the housing industry.

The main problem is that my property is now worth about 5-10% less than what I paid for it which is preventing me from being able to refinance. I was researching on the internet and came across the Fannie Mae Announcement #06-18 (Oct. 4th 2006) regarding the servicing of Conventional Mortgage Modifications.

I believe this addresses the situation I currently find myself in along with many other homeowners. Attached are recent pay stubs showing my current income.

Thanks you for your time and consideration.

The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

[elpjohnson]

I thought that I would post this hardship letter I wrote that might help some others in my situation. Oh and if anyone has any feedback let me know.

To whom it may concern,

We are writing this letter to explain the extreme hardship it will be for us when our loan adjusts from a 7.75% interest rate to a 10.75% interest rate in August 2008, thus, bringing up our payment up by approximately $1695.00 per month on top of our 3720.00 payment (not including impounds). A monthly increase of this amount will ruin us financially and we will surely fall into foreclosure. Therefore, we are requesting that our adjustable rate loan be modified to a fixed rate loan at the current rate of 7.75% for the duration of the loan.

We tried to refinance out of this loan but cannot due to the fact that we cannot get the value on the property that we need in order to refinance.

To date we have made all of our mortgage payments on time and will continue to make all payments in full and on time. We are trying to be proactive because we want to preserve our good credit rating as well as our most important asset, our home.

Please find attached all of the information you need i.e. 2 most recent paystubs, 2 current bank statements and W-2's.

We appreciate your time and consideration in this matter.

Sincerely,

[workinlossmit]

it doesnt state the "why are you behind factor...."

need to clarify that....

noting that you may or may not be able to handle an ARM change is "tentative..." and leaves open to interpretation for the underwriter to deny the request as a hardship....

just some feedback...

w.i.l.m.

[elpjohnson]

I'm not behind yet....It's the impending payment that will kill us.

[elpjohnson]

I just wanted to update my hardship letter....I wrote a new one and wanted some feedback on this.

To whom it may concern:

We are writing this letter to explain the extreme financial hardship it will be for our family when our loan adjusts from a 7.75% interest rate to a 10.75% interest rate in August 2008. This interest rate adjustment will cause our payment to dramatically increase in the amount of $1695 per month on top of our current payment of $4234.10 increasing the payment to $5929.10 per month. Our current income does not support an increase of this magnitude. As a matter of fact, a monthly increase of this amount will ruin us financially and within a few short months of this adjustment we will surely fall into foreclosure as we will not be able to afford the monthly payment.

We conducted a counseling session with a woman named Deborah Winston (888-669-2227 x742) from 995-HOPE and submitted a monthly budget where we only have a surplus of $158 per month after we pay all of our monthly obligations. According to the counselor we are currently utilizing 54% of our monthly income for housing costs which is way above the national average.

My husband, Kevin is the bread winner in the family and his income varies from paycheck to paycheck because of overtime, holiday pay (2 times per year) and uniform allowance. So, sometimes he makes his base pay of approximately $7839 per month and other times he makes more than that depending on the overtime he works each month. However, overtime is never guaranteed so we cannot depend on the overtime in order to fulfill our monthly obligations.

I am currently receiving Social Security Disability in the amount of $1435 and am also the payee for our son, Christian in the amount of $717 per month. Also, I receive a check from Calpers for my disability retirement in the amount of $829.74.

We would appreciate the opportunity to work out a loan modification where our interest rate will be frozen at the 7.75% interest rate for the DURATION of the loan, if the rate is just frozen for 2 to 5 years we will find ourselves in the same situation in a few short years from now.

Please take the time to review the information we submitted and consider our request. It is very important to us that we keep our account in good standing and preserve our credit rating as well as protect our main asset....our home.

Thank you in advance for your time and consideration in this matter. We are looking forward to working with Option One to resolve this situation. If you have any questions please contact us at xxx-xxx-xxxx.

Sincerely,

[Moe Bedard]

Much better! I give it my seal of approval.

[elpjohnson]

Thanks, Moe! I do think that this letter is much better because it has more detail. I am just hoping that I can get Option One to sit up and listen even though I am not behind on my mortgage payments yet.

[Moe Bedard]

Just keep shouting and they'll eventually listen, just to get rid of you

[HomeIsWhereTheHeartIs]

Hello all! I'm brand new to this site and this is my first post! I came across it by accident while seeking out examples of hardship letters. My sincere compliments to the owners/administrators. This is by far the best site out here for helping us homeowners with financial issues keep our homes. I am seeking advise on hardship letters, but didn't want to submit a long post in the wrong forum. Please advise me as to the best forum to get help with my hardship letter.

Thank you...

[Andrew]

Thank you for coming to Loansafe.org. You can post it in Tell Us Your Story.

[Andrew]

TTR, you may want to post this under your own thread.

[TTR125MOM]

I'm emberrassed to say that I'm not sure how to? I'm new to threads, so I'm real unfamiliar with how to navigate around on these things....how can I start my own thread?

Thanks for your help!

TTR

[devinkas]

Moe-

I have been reading this forum and it sounds like people are getting results. Well we were pre-approved by Bank of America for a loan modification and I am excited! I wrote my hardship letter and I just wanted to get your feedback on it if that was ok?...pasted below:
To Whom It May Concern:

I am writing this letter to explain my 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 the opportunity to do that.

There are several reasons that caused us to fall behind on our payments:
a) On July 6, 2007 my husband, was laid off from his job with IBM. He no longer receives Unemployment Compensation from the State of Florida as of January 2008.
b) Since July 2007, we went down to one income and were unable to keep up with the higher mortgage payments due to our escrow account from the beginning of 2007 being short on funds due to raised taxes and insurance coverage in Flagler County, FL.
c) In November 2007 we had to fly out of State for a family emergency which did not enable us to make that months payment.
d) Since we no longer have medical coverage, I had to pay for my visits to the doctor on several occasions due to prolonged and excessive menstruation. The Doctor Office would not see me, unless I had full payment at each visit.
e) Since there is only one income in our household, but my husband helps me with my business while still looking for a comparable job, I must travel a lot. Gas prices have become extremely high, if I do not travel to do presentations and meet with clients I cannot assure growth.

It feels like catch up for those two months we fell behind on is almost impossible, I assure you we have every desire of retaining our home and repaying what is owed to Bank of America. But at this time we have exhausted all of our income and resources so we are turning to you for help.

Our situation is getting better because like I stated above, my husband and I have combined forces and we are working my business together in order to ensure stability and growth in our income 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 owed and/or our mortgage payment so we can keep our home and also afford to make amends with Bank of America.

We truly are looking forward to you working with us and we are anxious to get this settled so we all can move on.

Sincerely and Respectfully,


looking forward to your feedback

[Andrew]

Welcome to the forum. You may want to start your own thread so you get more views and responses.

[devinkas]

How do I do that? I looked in the FAQ section with no luck...what am I missing?
Thanks

[Cat Damiano]

I can do it for you.............just look for your thread in this same section and with the title Hardship Letter..............o.k.

[solohome1403]

I was wondering if anyone can give me some advise on writing a hardship letter that a bank will be willing to listen to. My case is different from what I have read. I have owned my home for the past three years and have been on time and in good standing with the bank. But, the beginning of 2007 my wife and I purchased another home as "FAVOR" for a family member who was in risk of foreclosure. The agreement was that because we had better credit the rate would be better and the monthly payment would be more managable. Then after six months or so we would sell the house and they cour rent or purchase a smaller house to better manage their finance. In the mean time they would pay us enough money as "rent" to pay the mortgage. Well, at the time we attempted to sell last year and this year... we had no buyers. We even lowered it lower that what we owed and still no buyers. Then my family members got into trouble at worked, laid off, and now they cannot pay me money. I cannot afford to pay the mortgage on that house, and most programs out ther are for people who are living in the home they need assistance. The banks automatically assume I was "investing or flipping" with this second home, so how do I convince them that this is a "hardship?" That in fact the realestate down turn is partly to blame for why I am missing payments?

I appreciate the help.

[SoCal 67]

Can you be more clear? You wrote you bought the home for a family member but then said you wanted to sell the same home you bought for them. Why were you trying to sell it if it was for them to live in? Cant you just rent it out to someone else?

[solohome1403]

Thank you for your reply. The home was too much of a home for them to begin with, too big and too expensive. So, the plan was to sell and they can purchase another more managable home. In regards to renting, yes that is the option I have taken now, but no one is willing to pay as much as what I need to pay in monthly mortgage payments. So, I am short every month and have trouble matching the difference.

[Cat Damiano]

Hi solohome1403,

Welcome to the forum and thank you for joining..............

Modifications are given by the investors on the loan and what they are or are not willing to do...............and it also would depend on the type of loan that it is.

What relation is the family member to you and was this loan a bail out loan to save the home from foreclosure? The answer to this question would indicate if anything will be able to be put in place.

Who is the servicer on the loan?
What is the interest rate at?
Is it fixed or adjustable?
If adjustable when is it adjusting?
Are you paying interest ony?

[solohome1403]

Thanks for your reply, here is the information:
The family member is a cousin. And the loan was a bail out, but not identified as such at the time of closing. To be frank with you I didn't know there was such a thing. I thought if I framed it as such they would not consider it as business ethical.

Ocwen Loan Servicing, LLC is the servicer
Ther interest is 6.5% a 10yr interest only

So, given that information what do you think.

[Cat Damiano]

If the house is upside down in value............you might want to see if Ocwen will let you list the house with an agent that is well versed in short sale negotiation as a short sale..............depending on the state you live in, if a deficiency is allowed, they would be able to help you negotiate.
You would need to contact Ocwen and see what options the investor on your loan would have.
Ocwen
Loan Resolution Dept.
1-877-596-8580
Fax# 1-407-737-5693

Early Intervention Dept.
1-800-446-2936

[HelplessAZ]

Hey everyone...here is a rough draft of my letter. I need input we are 95 days post payment. We are working with HOPE and the numbers must have been right . Litton called us for a letter and paystub. Thanks in advance
To Whom It May Concern:

I am writing this letter to explain my 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 the opportunity to do that.

The main reason that caused us to be late is the reduction in my income. I work in the travel industry and that is one of the areas affected the current economic crisis. My fiancé and I also had a child this year. Because of this, my fiancés income has been greatly reduces as well as she works in the real estate field and also watches our son full time. She has been trying to gain employment but jobs have been scarce. fficeffice" />>>
> >
We also experienced medical bills this year along with repairs in our home such as the hot water pipe bursting under our garage floor. >>
>>
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 Litton Loan Service. 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.

As you know, we had never been late on our payments until September 2008. This past summer my income was reduced but my paychecks are picking back up where they should be at this point. Since the purchase of our home, our resale value has declined approximately 20%. This has made it impossible to refinance for a lower rate.

I feel that a loan modification would benefit us both. We would appreciate if you can work with us to lower or delinquent amount owed 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.

Sincerely and Respectfully,

[Cat Damiano]

Hi HelplessAZ,


Welcome to the forum and thank you for joining.........

Your letter looks good...........short and to the point.

Good Luck with the modification!

[HelplessAZ]

Originally Posted by Cat Damiano

Hi HelplessAZ,


Welcome to the forum and thank you for joining.........

Your letter looks good...........short and to the point.

Good Luck with the modification!

Thanks Cat Damiano! I wasnt sure if I should attach all the numbers like our bills and so on. We submitted all that to HOPE and I am sure they have shared the info with Litton. I also have another question...(I am the fiance, but not on the loan) should I submit what I made this year too or just base everything on my fiance (borrower's) info. Thanks