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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?
Welcome bubbles,

Normally, lenders may start the foreclosure procedure once you're 3-4 months delinquent on your payments.
Posted on: 09th Feb, 2011 10:01 pm
MY MORTAGE IS MORE THAN THE VALUE OF THE MY HOUSE. CAN I ASK THE BANK TO LOWER THE LOAN TO THE VALUE OF THE HOUSE OR SHOULD I DO A FORCE SALE
Posted on: 03rd Jul, 2012 04:01 pm
Hi CALVIN,

You can ask the lender for a principal reduction but it will be completely the lender's discretion whether or not he will consider your request. In case he does not consider your request, then you can decide on selling off the property.
Posted on: 03rd Jul, 2012 11:21 pm
Posted on: 01st Jan, 2013 11:39 am
Hi clover.

You can apply for a personal loan in order to pay off the credit card debts. However, you should note that such loans are available at a high interest rate. Apart from this, I don't think you will have any other options left.
Posted on: 01st Jan, 2013 08:57 pm
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