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Hardship letter: What is it and how to write it?

Author: Jessica Bennet
Community Mentor
Ask Jessica
Posted on: 12th Feb, 2008 11:07am
If you've fallen behind on your mortgage and need a workout from the lender, you should send them a hardship letter. A financial hardship letter is a letter that explains why you're in default, what you have done in order to correct the default, and the workout plan you are interested in.

What a hardship letter should include ...

If you are trying to get a workout from your lender, you should include the following in your hardship letter:
  1. Your contact information including your name, address, and account number.
  2. Mention what kind of hardship you're experiencing and the possible reasons for it.
  3. State when the hardship began.
  4. Give a brief overview of your income and expenses. Tell the lender that you're
    expecting a change in your income. Also inform the lender about any money you have saved to compensate for the default.
  5. Give a brief explanation of the workout plan you are interested in and state the reasons why you think it may work for you.
  6. Include how your credit counselor (if you have one to help you negotiate) can be contacted.

Apart from the above, while writing a real estate hardship letter you should provide a statement of your income, expenses, and financial statements to prove your
assets and liabilities. The type of information you should include are tax returns for the previous years, current pay stubs, etc. If you're trying to sell your home then you'll have to provide a copy of the realtor agreement along with the hardship letter. To get an idea how to write such a letter, check out a sample hardship letter.

Types of hardship that the lender may accept...

Here's a list of reasons why your hardship letter may be accepted by lenders.
  1. Loss of employment
  2. Medical problems that prevented you from working
  3. Reduction in salary
  4. You may be a single parent with a low income and you are not receiving child support
  5. You're a victim of some disaster
  6. Death of spouse or co-borrower
  7. Marital separation or divorce

Types of hardship lenders may not accept...

Your hardship letter may be rejected due to the following reasons:
  1. You're a student and cannot pay off the mortgage
  2. You're going through a divorce
  3. Your spouse has threatened to file bankruptcy

Usually mortgage lenders won't consider a workout plan such as forbearance, loan modification, short sale or foreclosure or a short sale without a proper explanation of your hardship. So, while writing a real estate hardship letter, you should provide a factual explanation of your financial situation. The hardship letter shouldn't criticize the lender or any other party involved in the mortgage transaction. It should simply state why you cannot follow the terms of the mortgage agreement along with a request for a workout plan.
Posted on: 12th Feb, 2008 11:07 am
my mortgage is with chase and i have ask for a loan mdification. i have to submitt a hardship letter and i need help writing it. i can not afford the payment as it is because of health problems. my income is much lower now and i am on disability. i can't refinance because i don't qualify. i am not currently latebut i don't know if i can make march's payment. they told me to continue to "make the payments" and that this could take up to 90 days. i don't know how i am going to make the payments and i don't want to be late. what do i need to include to make sure this letter gets me the rate reduction that i need?
Hi Vickie,

Welcome to the forum!

A hardship letter is nothing more than you sitting down and elaborating on your situation, in detail. I know in the beginning, it may seem like a difficult thing to do, but just sit down and start typing the story, and after you get started, it isn't as difficult as you think. Here are some guidelines that you can use:

You must explain why you have gotten behind and why you cannot afford your payments. You must be very specific as to the dates of the Hardship.

Use this guide to give you some ideas...

The key with a hardship letter is to be very detailed in the fact that you have tried everything you know to do...the challenge is, most lenders will not make adjustments to the mortgage if you aren't already behind in the payments. I know this sounds strange, but it is just how it is.

I hope this helps, and good luck to you!
Posted on: 12th Feb, 2008 02:29 pm
Thanks for the reply. I have submitted my letter along with tax returns pay stubs, bank statements and a budget. I have not yet missed a payment but I do not have the money to make the next one due. Will they wait until things get that bad before they help? Do they charge a fee to do this?
Posted on: 18th Feb, 2008 03:07 pm
Hi Vickiesmith,

Welcome back.

It's good that you've submitted the letter. The sooner you do so, the better. Well, I really don't know whether they will wait; this will totally depend upon the lender and I suppose he'll charge a fee if he's doing a loan modification. How long is it before the lender is likely to respond back to you?

Posted on: 18th Feb, 2008 11:09 pm
I'm not sure, theperson that took my request for the modification said it would take 60 to 90 days and for me to continue making the payment which I can't. I have no income as I have been dignosed with a rare blood disorder in which there is no cure and prevents me from working. We are having to live off of my husbands income which is a big change for us. I hope they will let me keep my house. If they modify it to a 5-6%interest rate we could afford it.

Posted on: 19th Feb, 2008 06:15 am
i think you need to kick your request up a notch, vickie. it seems that the individual you have been dealing with so far has failed to grasp the critical nature of your situation.

do not wait for them to contact you....can i say that again? DO NOT WAIT FOR THEM TO CONTACT YOU. okay...i will relax now.

you need to persuade them, cajole them, convince them that this is a very critical situation and that waiting 60-90 days is not an option for you. perhaps you need someone to assist you in this endeavor. do you have legal counsel who can act on your behalf?

no matter what, please try to contact a supervisor of the person with whom you have been speaking so that you can impress upon that person the immediacy.
Posted on: 19th Feb, 2008 10:56 am
Thanks George,

If I don't hear anything today, I will do just that. This stress is almost unbearable. I don't have legal or other counsel, no money for that. Do you think I should contact HOPE? Could they get the ball roling faster?

Posted on: 19th Feb, 2008 01:00 pm
by all means, contact HOPE. you need to contact anyone who can help you, frankly.

leave no stone unturned.
Posted on: 19th Feb, 2008 01:06 pm
I agree with George, you should contact them again and stress the urgency of your situation. I submitted my hardship letter and request for loan modification on Feb. 11 and was told that it should take 2weeks to get an answer. I made it a point to let them know that I will not be able to make the March payment as it is right now, so the sooner they can assist me in some kind of way, the better we all will be as I know that they want something for March and so on. Good luck!
Posted on: 19th Feb, 2008 02:10 pm
Modifications typically aren't something that's done right away, unfortunatley there are literally thousands of people asking for the same thing (loan mods). Workout Departments are over whelmed and understaffed, so they have to prioritize work and normally houses facing a foreclosure sale date are going to take priority first. The mortgage industry is hurting too and having financial problems so they can't hire more staff to help.

Just try and be patient, at best it's going to be a 6 week process in all likliehood
Posted on: 19th Feb, 2008 06:06 pm
keep in mind a modification in most cases won't lower the current payment you are on. If you have an ARM loan, the rate will just reset to the original rate before the adjustment.....if you have a fixed rate most investors won't allow you to lower the rate any lower than the initial rate...if you are delinquent all a mod is going to do is put your delinquent balance into the principal which will actually raise your payment..
Posted on: 19th Feb, 2008 06:09 pm
Hi Matt -
Different lenders must have different stipulations and offerings when it comes to loan modification. I'm with Countrywide and have been initially approved for a loan modification through their Home Retention department. They said I qualify for a rate reduction on both my first and second, which would inevitably decrease my monthly. I guess it all depends on your situation and your lender.
Posted on: 19th Feb, 2008 07:49 pm
yeah Shemiah, it actually depends upon the lender and your situation as to whether you will be able to get a rate reduction or a loan modification.

Matt, is it true that modification doesn't lower payments? because it is done to give some relief to borrowers and actually help them pay off the loan instead of being delinquent.

Posted on: 19th Feb, 2008 11:34 pm
Thanks for all the response. Does anyone have any experience with Chase? I just got off the phone with them and they said that It will take 30-45-60 to 90 days and that I still have to make March payment. I ask about deffering that payment and was told that they do not offer a forbearence program. If the rate is not reduced and my payment lowered, i will go into forclosure.
Shemiah- can you (IN GERERAL) share with me what your hardship letter said?
George/all How do I get in touch with HOPE? I live in North Carolina.
Thanks to all
Posted on: 20th Feb, 2008 08:45 am
Hi Vickie,
Below is the my letter (although I've removed some of the more personal info).

This letter is a request for a rate reduction for loans XX for my home located at XX.

Unfortunately, I have experienced several events that have drastically altered my financial situation to the point where I can no longer afford this home. THIS IS WHERE I GO INTO DETAIL OF MY FINANICAL SITUATION. As of now, I can no longer afford this residence and will soon fall behind on my payments if my monthly payment is not reduced to an amount that I can afford.

As you will see, I have never once been late on my payments because I value my credit, my home and the commitment I made when I entered into this agreement. I have also managed to maintain an excellent credit rating; however, I fear that if I do not receive any type of assistance soon for my situation then the aforementioned will be a thing of the past.



I hope that LENDER'S NAME will review this request with understanding and a willingness to help a faithful borrower whose situation has changed beyond her control. I thank you for reviewing my request and I look forward to hearing from someone soon.

Posted on: 20th Feb, 2008 01:14 pm
Hi Vickie,

Being a North Carolinian, you can contact HOPE Hotline toll-free at 888-995-HOPE .

Posted on: 21st Feb, 2008 12:53 am
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