How to Write a Loan Modification Hardship Letter (With Examples)

If you’re struggling to make your mortgage payments, a loan modification hardship letter is an important tool This letter lets you explain your situation and request adjusted loan terms from your lender.

Writing an effective hardship letter is critical to get the help you need Follow this comprehensive guide to learn how to write a compelling letter with examples to ensure your request is approved

What is a Loan Modification Hardship Letter?

A hardship letter, also called a financial hardship letter, is a personal letter you write to your mortgage lender It explains the circumstances causing your financial hardship and inability to pay your mortgage.

The letter requests a loan modification – adjusted terms to make the payments more affordable. Common types of relief include:

• Lower interest rate
• Extended repayment term
• Different payment plan
• Lower principal balance
• Temporary reduction or suspension of payments

Lenders are often willing to work with borrowers who have hit a rough patch if they believe the problems are temporary. A well-written hardship letter is key to getting the lender on your side.

When Do You Need a Hardship Letter?

A hardship letter is required anytime you apply for a mortgage loan modification with your lender. Common situations include:

• Job loss or reduced income
• High medical bills
• Divorce or death of a spouse
• Disability or illness
• Sudden expenses like home repairs
• Interest rate adjustments making payments unaffordable

You’ll need to describe your specific situation and financial details in the letter. Provide supporting documentation too.

Hardship Letter Format

While you want your letter to be personal, there is a standard format to follow:

• Your name and contact information
• Account number
• Explanation of your hardship
• Specific request for mortgage relief
• Overview of your finances
• List of attached documents
• Thank you and signature

Keep it to one page if possible. Be clear and concise to show you respect the lender’s time.

Tips for Writing Your Hardship Letter

Follow these tips to boost your chances of getting approved:

• Be honest – Clearly explain your hardship situation with facts.
• Show proof – Provide documents to back up claims.
• Know your finances – Have details on income, expenses, assets, and debts.
• Do the math – Show the lender how lower payments will help you.
• Request specifics – State exactly what relief you need.
• Use a template – Follow a professional format.
• Proofread carefully – Check for errors that undermine credibility.
• Follow up – Don’t assume the lender received your letter.

Hardship Letter Example #1 – Job Loss

Review this sample hardship letter for a loan modification due to job loss:

Date

ABC Mortgage Company
123 Main Street
Anytown, CA 12345

Re: Request for mortgage loan modification for [loan number]

To Whom It May Concern:

I am writing to request a loan modification for my mortgage due to a recent job loss. I have been a loyal customer with your company for the past 10 years. Unfortunately, due to COVID-19 impacts, I was laid off from my job as a sales manager at Acme Inc. on March 18, 2022.

As the primary income earner for my family of four, this loss of stable income has made it very difficult for me to make ends meet and keep up with mortgage payments. I have been actively searching for a new job for the past two months, but have been unable to secure employment so far.

I am requesting that you lower my monthly mortgage payment to $1,500, which is affordable based on my current unemployment benefits and savings. I have attached documentation verifying my job loss and unemployment status.

Sincerely,
[Your name]

Hardship Letter Example #2 – Medical Issues

Here is a hardship letter sample for a medical situation making mortgage payments unaffordable:

Date

ABC Mortgage Company
123 Main Street
Anytown, CA 12345

Re: Request for mortgage loan modification for [loan number]

To Whom It May Concern:

I am writing to request a temporary loan modification due to unexpected medical expenses that have impacted my finances. I have been a loyal customer with your company for the past 8 years.

Recently, my spouse suffered a heart attack and required emergency surgery. Due to this medical crisis, I have incurred over $15,000 in medical bills that are not fully covered by insurance.

As a result, I am unable to afford my current monthly mortgage payment of $2,000. I am requesting a temporary reduction to $1,200 per month for the next 6 months to help relieve this financial burden. After this period, I expect to be able to resume the original payment schedule.

Thank you in advance for your consideration of a loan modification during this difficult time.

Sincerely,
[Your name]

Hardship Letter Template

Use this template as a guide to write your own mortgage hardship letter:

[Your Name]
[Your Address]
[Your City, State, Zip]

[Date]

[Lender Name]
[Company Name]
[Address]
[City, State, Zip]

Re: Request for mortgage loan modification for [loan number]

Dear [Lender’s Name],

I am writing to request a modification to my mortgage loan terms because of financial hardship caused by [explain hardship here].

I am asking for the following specific assistance: [detail the modification request – lower interest rate, extended term, lower payment, etc.]. This request will help me get through this difficult period by making my payments affordable so I can avoid default.

I have attached supporting documents including [list documentation – bank statements, pay stubs, medical bills, etc.]. My current financial situation consists of:

• Monthly income: [income amount]
• Monthly mortgage payment: [current payment]
• Monthly expenses: [current expenses]
• Checking/savings account balances: [balances]

Thank you for your time and consideration.

Sincerely,

[Your signature]
[Printed name]

Next Steps After Your Hardship Letter

Here’s what to expect after sending a hardship letter requesting mortgage relief:

• Receive confirmation – The lender will send confirmation letting you know they received your letter and documents.

• Discuss alternatives – A representative will contact you to discuss modification options and other alternatives like forbearance.

• Provide more details – Be prepared to answer questions and supply any other details needed.

• Get the lender’s decision – It may take 30-90 days to receive the final decision on your modification request.

• Accept offer – If approved, you’ll get a modification agreement to accept new loan terms.

• Appeal if denied – If your request is denied, you can provide additional information and appeal.

Stay in close contact with your lender throughout the evaluation process. This greatly improves your chances of getting the mortgage relief you need during difficult times.