Sample Loan Modification Hardship Letter

A loan modification is a great way to get your budget back on track when you are having problems managing your monthly mortgage payments. This may not only allow you to lower your monthly dues, but you will also be able to avoid the extreme consequences of foreclosure. One important aspect you will need when pursuing this type of assistance is a hardship letter.

When seeking any type of loan workout your mortgage servicer will request that you provide them with a hardship letter to explain the details of your financial situation and the reasons why you can no longer afford your payments. Knowing how to prepare this hardship letter is a key step to getting your loan modification approved.

The first thing you want to do when preparing the letter is compose a list of all of the factors that have caused you to fall behind (or may) on your mortgage payments. Eligible hardships include those of a job loss, income reduction, illness, relocation, divorce, medical bills, death of a spouse, etc. You will also want to make a note of when each event occurred.  If you can include documentation of each event then this would be even better. But be aware that even though it may be very difficult to achieve this while current, it is possible.

When you finally get around to writing the letter you will want to format the letter properly. Make sure to use good grammar and have someone else proofread your letter for mistakes. Having a well written and formatted letter will go a long way in this process. You will want to keep this letter only about one to two pages at the most. Remember you are not the only one trying to accomplish this, these lenders get hundreds (sometimes thousands) of applications a day so you want to keep your letter short and straight to the point.

When you are writing your hardship letter you will want to list all of the elements you came up with that caused you to fall behind on your payments in chronological order. By listing the events in chronological order you will easily be able to relay your hardship story to the lender that is reading your letter so that he may fully understand your current situation. Also, when listing the reasons why you have fallen behind on your payments you will want to detail the steps you are taking to correct your situation. For example if you recently lost your job you will want to show how you are currently seeking employment and trying to fix this. If you can provide any documentation to support these claims it will be beneficial because t will prove your hardships.

Lastly you will want to make your plea. In your hardship letter you will want to explain how approving you for a modification is really a win-win proposition for both parties involved. Explain that you are aware of the consequences associated with this event and desperately would like to avoid foreclosure or bankruptcy. Having a well written hardship letter is one of the important steps in getting approved for a loan modification. Without this letter your chances of being approved are reduced dramatically. You can find examples here on LoanSafe.org and also one example below:

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 my mortgage to become unaffordable. 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 current home loan. Our home is no longer worth what is was when we purchased back in 2005 and we are trying to do all we can to avoid foreclosure.

The main reason that caused us to in this unfortunate situation is (insert reason here and don’t be too lengthy and long winded). 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.

We do not feel we have the means to repay the loan as agreed and we feel a loan modification will be beneficial to us both. It would be greatly appreciated if you can work with us on this so we can get this settled and move on with our lives.

Sincerely and Respectfully,

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

If you are currently pursuing a loan modification or any other type of loan workout we strongly encourage you to join our free forum here on LoanSafe.org. We are a community of over 33,000 homeowners and mortgage professionals alike. You will find all the information you could possibly need to assist you through this exhausting and very confusing loan workout process.