How To Write a Hardship Letter For a Mortgage Modification

One of the items your lender will ask for you to provide during the loan workout process is a hardship letter. A hardship letter is basically a letter you write to your lender explaining the situation you are in and why you have defaulted on your mortgage. This piece of information is essential for you to have any chance in stopping your foreclosure.

Keep in mind that the individual who reads your letter probably has many other clients they are working with, perhaps by the dozens. So make sure not to write a book when developing your letter. Keep your financial situation short, maybe 2 ½ to 3 pages at the very most.

The hardship letter is your support to your lender letting them know you can afford to keep your home, but just not under your current loan you are in. Keep in mind your lender will run your credit report to determine all the debts you’ve obtained and also request all of your financial information as well, so remember to be as truthful as possible. The consequence for lying on your hardship letter about your situation can lead to automatically being denied.

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

• Adjustable Rate Mortgage Reset- Payment Stock (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)

Once you analyze your situation, do possible research and put any notes down on paper, it’s time to write the letter. Below is a basic example of how you should write the letter.

Remember that your hardship letter is only one piece of the loan modification process, but key in helping you avoid foreclosure. There are still several more processes and stressful hours you must go through with your lender in order to get this done.

Remember to take the time to conclude your hardship letter with a friendly not at the end. The hardship letter is an important beginning to getting approved for a loan modification and saving your home. Remember to write with the best of your abilities and keep a polite and respectful tone.

Example Hardship 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


Co-Borrower’s Signature

September 7, 2007

Extra example:

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.

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  • Carla Griffin

    It gave me very great insight how to write a hardship letter to my mortgage servicer.

  • Rich Watkins

    Thank you for the help on writing a Hardship letter.


  • A.P.L.Y. Financial

    In order to understand how to qualify for a loan modification we must first understand what it is that the bank is looking for in order to qualify. What special set of parameters do banks put in place that must first be met? This is not a secret. This certainly requires some experience and understanding. For example, most everyone understands that in order to qualify for a mortgage to begin with you have to meet certain income levels (Based upon the amount borrowed), maintain a relatively high credit score and have great employment history. If you were lending a substantial amount of money to a complete stranger you would want to know the most important financial details about their lives as well. Does this person have a new job every couple of months? Do they consistently make the same amount of money or more? And so on and so forth. You must be within their guidelines and have a good reason for why you need the original terms of your mortgage that both parties agreed to, modified to begin with. What has changed and why? Can you even afford your mortgage anymore? There is a fine balance between qualifying and being disqualified because if your income compared to your expenses is too high or too low then you are disqualified. Sadly 86% of homeowners are disqualified partly because of these reasons and many others. Unfortunately the HUD counselors do not help much either because they are just taking the information that you give them and placing it onto the forms for you. They are not offering suggestions as to what would help you qualify. What if all you needed to do was drop your cable service or stop paying for your adult children’s bills in order to qualify? Maybe you don’t have enough income and would require a room to be rented in your home by another family member or use a reputable online service to locate a room renter. You have to be within their guidelines and have a perfect amount of income compared to expenses and an acceptable hardship. If you need us to help determine where this information needs to be then you can contact us at A.P.L.Y. Financial.
    With this all being said here are some basic steps below that will help.

    Step 1:
    The most important detail in the loan modification application process is accurately calculating your income and expenses. Make sure that you are taking your hourly wage multiplied by 40 and then by 52 divided by 12. You can also look at your YTD gross and net income on your checks and divide this by the number of months and days that you’ve been working. If you need help with this please contact us at A.P.L.Y. Financial.
    Step 2:
    Make sure that the information is easy to read and understand. The underwriters with the bank are looking at several files a day and do not have time to search through your information if it is poorly arranged. They will just send out a letter saying that information is missing and move onto then next file which typically results in the file being denied.
    Step 3:
    Don’t forget to sign and date everything. Keep your hardship short and sweet and to the point. Once again the underwriters at the bank do not have time to read a novel. They just want to simply understand why you need to modify the terms of your existing agreement with them.

    For more information you can contact us at A.P.L.Y. Financial Consulting and we would be more than happy to help.

  • sherry sutliff

    I am trying to get my mortgage modified due to separation, loss of income and credit card debt. I am the co borrower and recently found employment making a little less than I was but my spouse left a year ago and has made no contributions to household since. The bank is asking for his information and hardship letter also but can’t get any cooperation from him at all. What can I do to do this without him? Will the bank even consider this?

  • Evan Bedard

    Hello Sherry,

    I’m sorry to hear the situation you are in. Unfortunately, the only way to achieve a modification if your ex is still on the loan is to have him sign a quit claim deed, or send a letter to the servicer informing them that he’s no longer residing in the property or contributing to the household. They will require his signature on this letter and possible on the loan modification agreement as well.

  • HJ Thierry

    i have been trying to get my mortage company to reduce my interest rate for some time currently(8.3%)they have done some thing over the last two years and called it “loan modifications”. and now they say i can not get anything done because i have exceded my number of modifications. they have neve done anything to try and reduce my payments. Is ther anything i can so?

  • Moe Bedard

    You can only keep trying. A loan modification is considered a privilege and not a right. They often will refuse you if you are not late on your mortgage. If your rate is high, but you can still pay on time, they see this has no hardship etc. But even if you were to be late, this does not guarantee a loan modification. You should join our Mortgage forum here and network with other people just like you. There are many posts with information that can help you through this process..

  • A. Thomas

    I just found out that my Fannie Mae mortgage does not qualify for a HARP modification. I was looking into the HAMP modification. What is the difference? And does Fannie Mae really help you? Or should i request help from someone like NACA or just go through my servicer Wells Fargo?

  • Tracy Fagan

    My husband had A stroke 2008 went on disability, with the struggles of making our payments, we’ve keep up on them but the arm keep going up. Do the reviewers look into what our expenses are? Or just or income verses what my 31 % be, mine is exactly 31% that says my pay won’t change and but it will in the next arm adjustment…

  • Ms Manning

    I already went through a modification program, but I understand that their is a program for disable Senior when they turn 65 and there income changes is that true? I can not afford to pay the same mortgage payment as before due the lost of my disability income from work and all my medical expenses. I became disable at the age of 55 and my retirement income is very low add that to my social security income I can not afford to continue paying the higher mortgage payment since I turned 65 in July 2014. What can I do?

  • http://yahoo sandra johnson

    hello my name is sandra johnson I am in a very bad hardship all my bills is behind. my mortgage is with green tree account 360043152 phone number 1800-643-0202. My has it in his name but he never stayed here. I have always stay here but right now I do not have a job. I am 2 months behind. I just need some help I can not lose my home bc I have 2 kids and 1 grandchild that I have to raise. my home number is 912-562-4333 my brother are sister want help me out till I get a job.