The hardship letter is a written explanation of an event which caused you to default on your mortgage. A hardship letter will be required when requesting a loan modification or loan workout from a mortgage lender. The hardship letter should be compelling, yet concise and to the point.
Keep it to 1 or 2 pages, at the very maximum. Although you may be tempted, now is not the time to tell your lender how awful they may be and how horribly you have been treated.
It is your chance to explain an unfortunate event or events which caused you to fall behind, explain your current financial situation which details how you will prevent falling behind again and your desire to keep your home.
The hardship letter allows you to personally appeal to your lender to give you the opporunity to remain in your home.
Offering an explanation of how you have cut back and budgeted in order to now afford your mortgage payment is always a good idea.
Your goal is to prove the situation that caused the default was temporary and you are now in a position to make timely mortgage payments.
Make certain you include appropriate dates in your letter explaining when the event occurred which caused you to fall behind and when the event ended.
Reasons for Falling Behind
- Loss of Job
- Under-Employment (Hours cut back)
- Reduced Income
- Medical Bills
- Divorce or Separation
- Excessive Debt
- Death of a Spouse
- Death of a family member
- Mortgage Payment Increase
- Business Failure
- Job Relocation
- Damage to Property
- Military Service
- Increased Financial Responsibility (i.e. taking care of a sick or elderly loved one)