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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?
Thanks to everyone who has helped me with this. I will try to keep updates as to what is happening in hopes that this will help someone else as well.

Thanks again

Posted on: 21st Feb, 2008 08:06 am
Yes it is true that a loan modification does not always lower your payment..most investors will not allow a rate reduction on a loan that is already a fixed rate.....if you are 4 months late on your mortgage and you have a fixed rate your payment will go up because the 4 months are being put back on your principle and it is capitalized over the remaining term of the note thus raising your principle balance and raising your payment..

If you are current and simply asking for relief from your ARM then no your payment won't go up your interest rate will likely just be rest for 5 years to the original rate....if you are delinquent AND you have an ARM your rate might get rest but because of the delinquency and depending on how delinquent you are your payment still may go up also..
Posted on: 21st Feb, 2008 05:29 pm
Hi Matt,

Welcome to the forum.

Good suggestions Matt. You seem knowledgeable. Are you a lender or a broker?

Why don't you join this community? You can help people and at the same time can earn some $$$ and also make friends from all over the world.

You can introduce yourself at and let your self know to the world.

Feel free to ask if you have any further questions.

Posted on: 21st Feb, 2008 05:38 pm
Not a lender or a broker, just someone who does workouts for a mortgage company for a living..just hoping to educate a few people along the way!
Posted on: 23rd Feb, 2008 07:35 pm
Hi Matt,

You mean you're into negotiating with mortgage companies to help borrowers with some work out options? Isn't that similar to a foreclosure help company? I've heard most of these companies are frauds, is that so? You seem to be giving some great advice here. Not a problem if you aren't a lender or broker, you can still join this community and get rewards as other have. Just have a look at .

Even i joined with the aim to help others..i was looking for such communities to help people whenever I had time from my regular work and i stumbled across this forums one day and what a great community it is! I like the people here as they genuinely want to help others and you too seem to have similar thoughts. Well, that's great 8)

Hope to see you soon as a community member. :)
Posted on: 25th Feb, 2008 11:40 pm
No I work for a workout department for a mortgage company. I'd perfer to remain annonymous however. :)

As for Foreclosure assistance companies, I wouldn't go as far as to call them frauds because many have genuine intentions of helping homeowners, however from the borrower perspective those companies can not do anything you can't do yourself, so why spend the money? The money you spend on getting one of those Foreclosure Assistance companies to help you is money you could put on your delinquent mortgage!
The best rule of thumb is to work with your creditor and negotiate directly with them in most instances.
Posted on: 01st Mar, 2008 01:58 pm
Hi Matt,

I think the main moto here is to help people if we can. So if you can help people with your sound info and valuable suggestions there is nothing better then that :)

Best of luck,
Posted on: 01st Mar, 2008 02:14 pm
hello, i am currently deliquent in my loan by two months. i have decided to try an do a short sale or a deed in lieu of foreclosure. :? i have not loss employment just simply switched job which in the future will be more pay. also i had my daughter has a renter. which allowed me to have no problems. she is moving out of town to college. so there went the extra income. i am attempting to get a second job. next questions: now bad does a short sell or deed in lieu of foreclosure effect your credit? 100 or more points?
Posted on: 09th Sep, 2008 05:46 pm
Well WendyC, a short sale or deed in lieu (dil) reduces your credit score by several points. To know how short sale/dil affects credit , refer to a previous community discussion on this topic.


Posted on: 10th Sep, 2008 05:16 am
Posted on: 10th Sep, 2008 07:02 am
Our group of attorneys will help expedite this process for you. The Lenders tend to listen better when you have legal representation. You have started the process which is good. Why not have an attorney negotiate every aspect of your loan. Maybe they will forgive some of the balance due in the process. You will get either a 2-5 year fix interest only payment or a 30yr fix payment. Whatever will give you the lowest and most beneficial payment that you can afford. With your current financial situation, what payment can you afford?

J. Miller
Wholesale Financial
16661 Ventura Blvd.
Encino, CA 91436
(818) 789-3998 ext.301
Posted on: 30th Sep, 2008 11:36 am
i need a lower payment and interest rate on my home. the lender promised to refinance me in 6 months which this did not happen. now i am stuck with a payment that is becoming too much to pay. i am about to fall behind. do you have any suggestions how i should proceed.
Posted on: 25th Oct, 2008 01:07 pm
Hi Renee!

You can contact the lender and ask why he is not ready to refinance the loan? Normally the lenders agree to refinance a loan when it is 7-10 months old. I think that is causing the problem in your case. You can go in for a loan modification if you fall behind on payments. I think that will help you.

Posted on: 27th Oct, 2008 03:48 am
I need to write a hardship letter do not know where to start my house has a offer of 45 less then what I payed I can not afford all the personal bills and the mortgage to I am overextended on all my credit cards and have exhusted all f my savings
Posted on: 30th Oct, 2008 08:52 am
Hi paulined!

I can understand your situation. In the hardship letter you should provide the reasons for not paying the debts. Along with the sample hardship letter, the lender will also ask you to submit pay stubs, tax records and other financial statements.

Posted on: 31st Oct, 2008 02:42 am
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