Examples of Hardship Letters for Mortgage Loan Modification

While we always want to make our monthly mortgage payments, sometimes life can get in the way. If youâre in need of mortgage assistance, there are options available. One of those options involves writing a financial hardship letter. A financial hardship letter is a written document for your lender explaining why youâre unable to meet your financial obligations. Letâs learn more about how these letters work, when to use them and how to write an effective letter.

Falling behind on mortgage payments can happen to anyone. Job loss medical issues, divorce death of a spouse – life sometimes deals unexpected blows. When this happens, writing a hardship letter requesting mortgage loan modification from your lender can help save your home.

A well-written hardship letter explains your situation and asks the lender to modify your loan terms to make payments more affordable. With home foreclosures still occurring at high rates lenders want to avoid foreclosing if possible. They would often rather modify loans to keep homeowners paying something rather than foreclose and get paid nothing.

If you need to request mortgage loan modification from your lender, your hardship letter is a critical part of the process. Here are some examples and tips to write an effective hardship letter for mortgage loan modification.

What to Include in a Hardship Letter for Mortgage Loan Modification

A hardship letter has one purpose – to convince the lender that you are facing financial hardships beyond your control that affect your ability to pay your mortgage, This is key to getting them to modify your loan Your letter should

Clearly explain the circumstances causing your hardship. Be detailed but concise.
Provide specific dates of when the hardship began affecting your finances.
State whether the hardship is temporary or permanent.
Express your desire to keep your home if possible.
State exactly what you are asking for – reduced payments, loan term extension, etc.
Explain how you will resume normal payments if the lender modifies your loan.

To support details in your letter, attach documentation like pay stubs, medical bills, divorce papers, etc. This provides proof of your situation.

Now let’s look at some examples of effective mortgage hardship letters.

Job Loss Hardship Letter Example

Here is a sample hardship letter for a mortgage loan modification due to job loss:

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June 1, 2022	ABC Mortgage Company 123 Main St.Anytown, CA 12345	Dear Sir or Madam, I am writing to request mortgage loan modification options from ABC Mortgage Company. Due to job loss, I am unable to make the monthly mortgage payments on my home at 456 Oak Rd., Anytown, CA 12345. Up until last month, I was employed as an operations manager for XYZ Corp for the past 6 years. Due to downsizing, my position was eliminated on May 1, 2022. I have been actively seeking re-employment but have been unable to secure another job so far despite my best efforts.  Due to the loss of my job and primary source of income, I am experiencing extreme financial hardship. I have exhausted my savings and am unable to make June's mortgage payment or pay future payments for the foreseeable future. I wish to avoid foreclosure and remain in my home until I can secure employment again.I am requesting that ABC Mortgage Company reduce my monthly mortgage payment amount for the next 6 months from $2,000 to $500. This temporary assistance will allow me to make reduced payments during this time of financial difficulty. Once I secure new employment, I will contact you to re-evaluate my monthly payments and resume normal payments.I have attached documentation supporting my job loss, financial status, and efforts to find a new job. Please let me know if any additional information is needed to evaluate my request. I appreciate your consideration and cooperation as I work through this challenging situation.			Sincerely,John Smith

This letter outlines the hardship (job loss), provides dates, asks for reduced payments temporarily, and states intent to resume normal payments once re-employed. Supporting documents are offered to back up the details.

Medical Hardship Letter Example

Here is a hardship letter sample for a mortgage loan modification due to medical issues:

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July 15, 2022XYZ Mortgage Company456 Broad St. Anytown, CA 12345Dear Sir or Madam:I am writing regarding my mortgage loan with XYZ Mortgage on my home at 123 Main St., Anytown, CA 12345. Due to substantial medical expenses for my spouse, I am unable to make the monthly mortgage payments and am requesting mortgage loan modification options.In March 2022, my husband John was diagnosed with stage 4 cancer. Since then, he has undergone expensive treatments and surgeries totaling over $100,000, which are ongoing. Although we have health insurance, the out-of-pocket costs have been considerable, and I have gotten behind on many bills, including the mortgage payments. Due to the high medical costs and numerous missed work days for John’s care, we have accrued significant medical debt and have been unable to make mortgage payments for the past two months. I wish to avoid foreclosure and continue living in our home but need a modified payment plan to get through this difficult time. I am asking that XYZ Mortgage Company lower my monthly mortgage payments to $1,200 (from $2,000) over the next six months to allow me to get caught up on the mortgage. Once John completes his cancer treatments, I will contact you to re-evaluate our financial situation and resume normal monthly payments if possible. Please let me know if any additional documentation is needed to process my request. I appreciate you working with me as I take care of my sick husband. I look forward to hearing from you.		Regards,Mary Smith

This letter describes the medical issues, financial impact, and request for reduced payments for a set timeframe until their situation hopefully improves. Medical bills and records could be provided as proof.

General Financial Hardship Letter Template

If your hardship is due to general financial issues you can use a more generalized letter:

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August 1, 2022	ABC Mortgage Company123 Main St.  Anytown, CA 12345Dear Sir or Madam: I am writing to discuss my mortgage loan with ABC Mortgage on my home at 456 Oak Rd., Anytown, CA 12345. Recently I have experienced financial difficulties due to _________________ that have affected my ability to make the monthly mortgage payments. [Explain details of your hardship here. For example: job change resulting in lower pay, high medical bills, large credit card debt, etc.]I have fallen two months behind on my mortgage payments and am unable to catch up at this time. I wish to avoid foreclosure and remain in my home. I am asking that ABC Mortgage consider modifying my loan terms to allow me to get back on track with a more affordable payment. [State specifics of what you want here. For example: 6 month reduction in payment, extension of repayment term, change from adjustable to fixed rate, etc.]I am confident that if my payment amount is lowered, I will be able to resume making regular monthly payments. Once my financial situation is more stable, I will contact you to re-evaluate my loan terms if necessary.Please let me know if any additional documentation is required for you to consider and process my request. I appreciate you working with me to modify my loan terms during this difficult period. Thank you for your consideration.Sincerely,[Your name]

This general template allows you to customize your details and what you are requesting from the lender.

Tips for Writing a Mortgage Hardship Letter

Address your letter to a specific person or department at the mortgage company if possible.
Keep it short – one page is ideal.
Be honest about your situation while emphasizing your desire to cooperate with the lender.
Proofread carefully and make sure you attached supporting documents.
State a specific timeframe for any modified payment plan you request.
Express appreciation to the lender for their consideration.
Follow up if you do not receive a response after 2-3 weeks.

Alternatives to Hardship Letters

If the lender rejects your hardship letter request for a loan modification, don’t give up. You may still have options to avoid foreclosure:

Request mortgage forbearance – Your lender postpones or reduces payments for a limited time until you can resume paying.
Apply for government assistance – Programs like HAMP and HARP can help qualified homeowners refinance or modify loans.
Sell your home in a short sale – This allows you to sell the home for less than you owe and avoid foreclosure.
Deed your home back to the lender – Also called a deed in lieu of foreclosure. You voluntarily transfer ownership and move out to avoid foreclosure.
Refi with another lender – If your financial situation has improved, consider refinancing your mortgage with another company.

Discuss these alternatives with your lender if a mortgage hardship letter does not result in the loan modification you need. Don’t wait too long before seeking help – you have options even if you are months behind on payments.

Get Help from HUD-Approved Counselors

For free assistance putting together your hardship letter and navigating the loan modification process, contact a HUD-approved housing counselor. They have experience communicating with lenders and mortgage servicers. Find one near you through the Consumer Financial Protection Bureau’s website.

Consulting an Attorney

If you need legal advice regarding your situation, consider consulting a foreclosure defense or real estate attorney. An attorney can help craft your hardship letter and directly negotiate with difficult lenders.

What Is A Financial Hardship Letter?

A financial hardship letter is a document in which you can detail your financial situation for your lender in hopes of getting a payment extension or reduction.

This letter should explain your current financial situation and why youâre unable to make payments. It should provide specific details about the hardship, such as when it began, how it was caused and how long it may continue.

Financial Hardship Letter: Example

examples of hardship letter for mortgage loan modification

The typical format of a financial hardship letter is as follows:

Contact info: Provide accurate contact information including your address, email and phone number.
Introduction: Explain who you and/or your family are along with your connection to the lender.
Situation: Write a brief explanation of your situation and why youâre asking for help.
Plan of action: Explain what you are requesting from the lender and how you plan to adjust your financial situation so you can continue to make payments in the future.
Closing statement: Let the lender know what type of response you are looking for and thank them for their time.
Signature: Signing the letter is a sign of good faith and could be legally required for proper documentation.

After your letter is complete, it must be addressed to your lender. The letter may be mailed to your lenderâs office or sent electronically via email. We recommend you check if your servicer requires a letter of hardship before submitting one. If they do require one, use the financial hardship letter example below as a guide or template for your letter.

How To Write A Hardship Letter for Loan Modification Step by Step Guide | Writing Practices

FAQ

What is considered a hardship for a loan modification?

Provide proof of significant financial hardship, such as long-term illness or disability, the death of an income-providing family member, a sudden hike in housing costs like property taxes, divorce or natural disaster.

What is an example of a good hardship letter?

I am writing this letter to request assistance with my personal loan during a time of financial hardship. Approximately two weeks ago, I was let go from my job due to company-wide layoffs. As a result, I have been unable to continue making regular payments on my loan.

How to write a hardship letter for loan modification?

When you’re writing a hardship letter for loan modification, it is important for you to keep in mind that lenders know the reason you’ve fallen behind with your mortgage payments. Therefore, when writing a financial hardship letter, you should be honest and provide the right amount of detail.

What is a mortgage financial hardship letter?

Create a high-quality document now! A mortgage financial hardship letter requests a lender for loss mitigation on a mortgage loan — such as a loan modification for a reduction in payments or a short sale — due to extenuating financial circumstances.

When should I write a financial hardship letter?

You should be ready to complete a financial hardship letter if you’re having problems paying off your mortgage and want to request your lender for leniency or loan modification to avoid foreclosure. Writing a hardship letter is mandatory if you want your lender to consider you for a short sale, loan modification, and temporary repayment plan.

What is a hardship letter?

A hardship letter is a crucial document in the loan modification process, where you explain to your lender the financial difficulties you’re facing and why you need a modification of your loan terms. It’s your opportunity to provide context to your financial situation and persuade the lender to offer more manageable repayment terms.