How to Write an Effective Home Loan Hardship Letter

Falling behind on your mortgage payments can be an incredibly stressful situation. As someone who was once in that position I know firsthand how overwhelming it can feel. The good news is that you have options and writing a thoughtful hardship letter to your lender can help.

In this comprehensive guide, I’ll walk you through exactly how to write a home loan hardship letter that gets results With some strategic planning and sincere communication, you can get the mortgage relief you need during difficult times.

What is a Hardship Letter?

A hardship letter is a personal letter you write to your mortgage lender explaining your circumstances and requesting relief. The goal is to show them documentation of your hardship, provide insight into your situation, and propose potential solutions to avoid foreclosure.

You would send this letter if you are unable to make your monthly mortgage payments and need the lender to offer some type of alternative repayment plan. This may include:

• Lower interest rate
• Extended loan term
• Lump sum payment deferral
• Reduced monthly payment amount
• Temporary pause on payments

A well-written hardship letter humanizes you and gives the lender confidence that you want to honor your obligations It transforms an account number into a person worth supporting

When Should You Write One?

The ideal time to send a hardship letter is as soon as you anticipate falling behind on payments. This shows the lender you are being proactive.

Don’t wait until after you’ve missed several payments and received default notices. At that point, the lender may be less willing to negotiate.

Act quickly at the first sign of financial hardship. Be transparent about your situation before it spirals out of control.

What to Include in Your Hardship Letter

Your hardship letter should be concise, honest, and solution-oriented. Aim for 1 page explaining:

• Your full name and loan account number
• Purpose of your letter (requesting mortgage relief)
• Brief overview of the hardship and solution

2. Details of the Hardship

• What caused the hardship (job loss, medical emergency, etc.)
• When the hardship began
• Its impact on your finances
• Whether it’s short term or ongoing

3. Proposed Solution

• The specific relief you’re requesting
• Why you believe this solution will allow you to avoid delinquency or default
• How it will mutually benefit you and the lender

4. Supporting Documentation

• List any proof of hardship you’ve included with the letter (pay stubs, doctor notes, etc.)

5. Appreciation & Contact Info

• Thank the lender for their consideration
• Provide your phone number and email address

Getting straight to the point quickly will increase your chances of approval. Avoid dramatic language and keep the focus on actionable solutions.

Hardship Letter Template and Example

Feel free to reference this hardship letter template and example when drafting your own:

Date

Lender Name
Lender Address

Re: Hardship assistance for Mortgage Account #

To whom it may concern,

I am writing to request mortgage relief assistance on my home loan. In March 2022, I lost my job due to company downsizing. This loss of stable income has prevented me from making my normal monthly mortgage payments.

I am requesting that my loan be modified to allow a 3-month deferral of my payments, after which I could resume my regular payments. I have attached documentation verifying my job loss and unemployment status.

This temporary arrangement would allow me to focus on securing a new position without the immediate stress of making mortgage payments. I appreciate your consideration of this win-win solution that prevents me from defaulting while minimizing risk for your company.

Please feel free to contact me at (555) 123-4567 or [email protected] if any additional information would be helpful. I look forward to hearing your decision soon. Thank you for your time and understanding.

Sincerely,

Your name

Key Takeaways

• Introduce yourself and clearly state the purpose
• Explain the hardship event and financial impact
• Request specific relief and explain the mutual benefit
• Offer supporting documents as evidence
• Close politely with contact information

Use this example as a guide when drafting your own hardship letter. The most important thing is that your unique situation and voice come through.

Hardship Letter Tips

Beyond the basic format, here are some additional tips for writing an effective hardship letter:

Be detailed but concise – Give enough background without writing a novel. Stick to 1 page max.

Use a professional tone – Be clear and direct without much emotion. This is a business letter.

Take responsibility – Don’t blame the lender or make excuses. Focus on the facts.

Explain how the lender benefits – Show how your request minimizes their risk.

Proofread carefully – Double check for spelling/grammar errors before sending.

Send by certified mail – This documents they received your letter.

Follow up – Politely call or email if you don’t receive a response within 2 weeks.

What Hardships Qualify?

For your hardship letter to be considered, the circumstance must generally be unavoidable and out of your control.

While each lender is different, some common qualifying hardships include:

• Job loss
• Significant income reduction
• Major medical expenses
• Disability or illness
• Divorce or separation
• Death of a spouse or family member
• Uninsured losses from natural disaster
• Unforeseeable home repairs
• Military deployment

Hardships that typically don’t qualify include:

• Overspending or poor budgeting
• Student loans or other high debt
• Voluntary changes like quitting your job
• Cosmetic home renovations

The event must put you in an untenable financial position where you simply cannot afford your current mortgage payment.

What Documents Should You Include?

Back up your claims with supporting documentation. This adds credence to your letter and demonstrates you are acting in good faith.

Documents to include with your hardship letter may be:

• Pay stubs before and after hardship
• Bank statements
• Tax returns
• Doctor’s notes
• Medical bills
• Notice of job loss
• Legal notices
• Insurance information
• Death certificate

Provide as much relevant, verifiable evidence as possible. Make it easy for the lender to validate the hardship you described.

How Do Lenders Evaluate Hardship Letters?

Lenders have entire departments dedicated to loss mitigation. Their team will thoroughly review your letter and documents to confirm it meets their hardship assistance guidelines.

Some of the key factors they consider are:

• Validity of hardship – Does evidence clearly prove unavoidable crisis?

• Previous payment history – Were you in good standing before hardship?

• Duration of problem – Is it a temporary blip or ongoing inability to pay?

• Current income and assets – Do you have any resources to pay something?

• Requested solution – Is proposal reasonable to maintain loan viability?

• Credit reputation – Do you still take obligations seriously?

• Property value – Is it worth more or less than loan amount?

• Foreclosure costs – Would they lose money foreclosing versus cooperating?

If they can check off each of those boxes, you are much more likely to receive an approval or counteroffer.

Above all, lenders want to feel certain you have a desire and ability to eventually repay what you owe. They are in the risk management business, not the home repossession business.

What Are Your Options if Denied?

If your initial hardship request is denied, don’t panic. You still have options:

• Appeal the decision – Additional info may change their mind.

• Request a different arrangement – Ask if they would approve a smaller change.

• Offer a repayment plan – Present a schedule to catch up on missed payments.

• Apply for government assistance – HUD and state agencies may have relief programs.

• Meet with a housing counselor – Get help assessing alternatives like forbearance or refinancing.

• Sell your home – If all else fails, a short sale may allow you to avoid foreclosure.

With persistence and an openness to compromise, many homeowners navigate through tough times without losing their house.

Sample Hardship Letters

To further help visualize what an effective hardship letter looks like, here are two additional sample letters you can model:

Job Loss Hardship Letter

Date

Re: Mortgage account #1234567

Dear mortgage servicer,

I wanted to make you aware of a job loss in my family that means we are struggling to make upcoming mortgage payments. As the primary income earner, I was let go from my position as Sales Manager at ABC Company on January 5th, 2023.

I have attached documentation to verify my terminated employment along with our most recent bank statements. As you can see, we do not have