Hardship Letter
One of the items your lender or servicer will ask for during the loan workout or loan modification process is a hardship letter. A hardship letter is a written explanation as to what “event” has caused you to fall behind on your mortgage and it vital in helping you stop foreclosure.
This letter acts much like an outline or biography of your current “life” issues that are affecting your ability to meet your financial obligations.
Please keep in mind that your are composing the hardship letter for your lender or servicer and because of the foreclosure crisis, they are extremely busy and back logged. So, with that in mind, do not write a book because most likely it will not get the attention of an over worked, $12 an hour loss mitigation employee. Keep it short and to the point. Usually 1 or at maximum 2 pages is more than enough to get your point across.
Here is an example list of hardships that lenders consider during the loan workout process:
- Adjustable Rate Mortgage Reset- Payment Scock (uncommon, but we will see more lenders accept this in the future)
- Illness
- Loss of Job
- Reduced Income
- Failed Business
- Job Relocation
- Death of Spouse or C0-Borrower
- Death
- Incarceration
- Divorce
- Marital Separation
- Military Duty
- Reduced Income
- Medical Bills
- Damage to Property (natural disaster or unnatural)
- Other (Please Specify)
Now that you understand what your lender or servicer is looking for, it’s time to sit down and write a hardship letter. I made it easy for you by giving you a couple templates below that you can use as a boiler plate for your own letter. Make sure you make it unique to your situation.
Remember that your hardship letter is only one piece of the loan workout process, but key in helping you avoid foreclosure. You will still need to jump a few hurdles with your lender before they will approve you any kind of work out plan.
Example Hardship Letter:
Name: (Your Name)
Address: (Your Address)
Lender Name: (Your Lender)
Loan #: (your Loan #)
To Whom It May Concern:
I am writing this letter to explain my unfortunate set of circumstances that have caused us to become delinquent on our mortgage. We have done everything in our power to make ends meet but unfortunately we have fallen short and would like you to consider working with us to modify our loan. Our number one goal is to keep our home and we would really appreciate the opportunity to do that.
The main reason that caused us to be late is (insert reason here and don’t be too lengthy and long winded) Soon after being late and our income not being nearly enough, we had fallen further and further behind. Now, it’s to the point where we cannot afford to pay what is owed to (lender). It is our full intention to pay what we owe. But at this time we have exhausted all of our income and resources so we are turning to you for help.
(The approximate date of hardship and we believe that our situation is Temporary or will be Permanent.)
Our situation has got better because (reason here) and we feel that a loan modification would benefit us both. We would appreciate if you can work with us to lower or delinquent amount owed and or payment so we can keep our home and also afford to make amends with your firm.
We truly hope that you will consider working with us and we are anxious to get this settled so we all can move on.
Sincerely and Respectfully,
Borrower’s Signature
Date
Co-Borrower’s Signature
Date
Hardship Letter Contributed by LoanSafe.org Forum Member
September 7, 2007
To: Countrywide Mortgage account # 058989482
Re: Mortgage modification program
Due to the recent adjustment to the mortgage I currently have with your company, I am finding it very difficult to afford the new payment. I have a 3 year fixed rate which is now adjustable and is schedule to adjust again in Feb. 2008.
Considering my current income, there will be no way I can afford the increased payments come February. Hopefully there is way to renegotiate the terms of my current mortgage to avoid default and help stop foreclosure on my home.
Is it possible to have my current adjustable rate mortgage converted to a fixed rate? If this is not possible can the next rate change be postponed to a future date to allow me to hopefully refinance. Any other solutions you could provide would be greatly appreciated.
I have had no problem making my payments for over three years now and do not want that to change. My mortgage was originally written by another company and bought by Countrywide. The original mortgage terms are terrible but it was the only loan I was qualified for at the time. I was assured that refinancing would be no problem but that turned out not to be true due to the downturn of the housing industry.
The main problem is that my property is now worth about 5-10% less than what I paid for it which is preventing me from being able to refinance. I was researching on the internet and came across the Fannie Mae Announcement #06-18 (Oct. 4th 2006) regarding the servicing of Conventional Mortgage Modifications.
I believe this addresses the situation I currently find myself in along with many other homeowners. Attached are recent pay stubs showing my current income.
Thanks you for your time and consideration.
The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.
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I heard on a loan modification you can delete the second mortgage if you have a firts and a second. Is the true?
That is untrue because the trust deed who holds the 2nd position of your property wants to get what they can from you. The 2nd trust deed can not foreclosue on your house, unless the 1st trust deed is in default.
Is it better for me to paid a special loan modification company to handle the loan modification from my existing lender or sure I just try to work with my lender on a loan modification.
Joua,
Please call me for free consultation as needed. You better have a company to represent you.
Here is my number 559-776-2373
I have a 3o year fixed rate at 9%. I used to have good credit but when I refinanced I went through Ameriquest. Now Citibank owns the loan..I believe ameriquest no longer exist. I did not even know that citibank was going to be my lender. Will I qualify for a modification of my loan..I cannot afford what I am paying now. Due to the housing marker I pulled money out of the equity I had in my house and I refinanced. But now my house is not worth what it was in the past and I owe more money than what my house is worth. I was told that only option arms qualify for loan modifications is this true?
Nope, give me a call and the new american dream can help.
our number is 888-DONT CALL THESE SCAMMERS (edited by Moe Bedard)
Thre is hope don’t waste time.
Looking forward to your responce
Is it wise to pay up front for loan modification? May individual state not to pay anything until finalize. Many unfaithful company that take your money and do nothing.
If you need help with your modification drop a note. I got good help from a company.
Need help working with HomeQ for a modification to Make Home Affordable – fell behind hoping for better days back in October 08 – needless to say – the days have not come – we’re still behind and need help fast.
Thanks
There are so many variables to Loan Mods. Some lenders reduce rate, some reduce both rate and principal and some reduce rate/term/principal and capitalize or forgive missed payments. It depends on your lender and their ability and willingness to help adjust your loan. Achieving this on your own is very difficult. My company will negotiate with your lender on your behalf. If you’d like some free, no obligation information, let me know. \
Loan mods are all in the Hardship!
This is your opportunity to “sell” your case to the lender… a good hardship letter will go a long way in getting you what you want!
Oliver
Im in trouble. Just found out Rodis law grp. is a scam and im out $3,000. I need help with a loan modification.
Your post is very well crafted and I have learned so much about you interests and Bank of America. I
We just bought a house last 09/2008. unfortunately, i dont work full time now and my wife is the only one who has a more stable job, and were having a hard time with our mortgage, though we havent missed any mortgage payments yet. Can we apply for loan modification even though we havent missed any payments yet? before we become delinquent? Thanks. Please help
Greetings. I’m an attorney and member of the Real Estate, Probate, and Trust Section of the Florida Bar who has been assisting clients in avoiding forclosure for over 20 years. There is a lot of valuable consumer information on LoanWorkout.org, and I’ve enjoyed my visit. I can’t emphasize enough to you good folks that before you hand your money over to someone who’s promised to help you save your home, find out who you’re dealing with. What are their credentials? How many complaints have they had? What are they charging you? There are some legitimate companies who will assist you for a very nominal fee, but it’s not all that different from buying a car.. You’ve got to check under the hood. Is it going to run after you buy it? What’s a reasonable price? You can’t just cross your fingers and hope it’s not you who is taken for a ride. Be smart.
I am a single mom, purchase my home 10/2006, did not understand much of what i was doing and getting into, because of my credit score, and no down payment, i got a adjustable rate and high mortgage, i was desperate at the time. I am not behind on my mortgage however with my mortgage rate going up from when i purchase and paying other bills i am struggling, i was denied a loan modification recently due to salary to expense ratio. I honestly did not feel i did a good job writing the hardship letter, please show me how to write this letter as my plan is to re-apply with the help of Hope for Home Owners Agency. Thank you
My husband & I are in the middle of trying to get our mortgage modified. I cannot stress enough to anyone else in this predicament to do your homework! Don’t hand over your hard earned money to a company that promises you the moon and the stars without checking them out first. There is a company we contacted that wanted to charge us 2k, told us to stop making our mortgage payments altogether and forbade us from speaking with our lender. All of these things raised reg flags, and when we checked them out on BBB, they received an F for various issues consumers have had with them. The most serious being no results, a home in foreclosure, and little or no contact with the company after they received their fee. From everything I’ve read, you, the borrower, need to contact your lender and make amends.
what can i do i just got a letter with a court date to foreclose on my home in 30 days,dont want to lose it cant afford a lawyer really but will if i have too what can i do help anybody gone thru this please
I have a 30yr fixed at 5.5% i orginally purchased my home for $233,000 is now worth $180,000 I have been current on my payments for 5 years
however doing the math each month i should be negative 600 – 1,000
we budget very carefully ( never eating out buying sale items ) i currently ask my bank if i would qualify for a loan modification – based on the math over the phone they will be sending me an application. IS IT TRUE YOU NEED TO HAVE LATE PAYMENT’S ON YOUR MORTGAGE TO QUALIFY FOR A LOAN MODIFICATION ? BASED ON MY FAMILY’S INCOME MANY PEOPLE CANNOT BELIEVE WE MAKE OUR MORTGAGE – I DON’T WANT THIS TO HURT ME. I’M CURRENTLY IN DEBT WITH OTHER LOANS BUT ALWAYS MAKE ATLEAST A MINIMUN PAYMENT. WOULD THIS HURT ME?
I purchased my home 7 years ago got a 5%. Based on some family situations i’m applying for a loan modification. If my lender decides to approve it and reduced my interest for 3 years what will happend to my current interest rate? last thing i want is to have a 3% for 3 years and then have to refi
and get an 8% for the rest of the life of the loan.
If my loan modification gets approved will this trash my loan?
Are there progreams sponsored by Dept of Human Services(DHS) that can aid in mortgage payments. Please advise me on hoiw top obtaine lower mortgage payments before I am in default so far I have not missed any payments but medical bills and lowered income are making default possible
I help people modifying their loans. The payment goes with the process of of loan modification. There’s no upfront fees.
I can help you:
If you are behind with your mortgage payments.
Pay High interest rate.
Pay interest only.
Adjustable rate.
Unable to refinance.
You’re in hardship to pay your mortgage.
I have team of mitigation and lawyers expert that can help you out.
Call if you have question and needed help: 303.827.9400
We work with people from any state.
****MONEY BACK GUARANTEE*****
I am in the same predicament as many listed on this site. My income has changed and I do not want to lose my home. I have already discovered that there are scammers who are willing to take you for everything. I need help, please!
Worthy advice, I got stuck using the predators in the modfication scam. I fought back, I called the Bank of America. Disputed the amount to these thieves. 2979 to be exact. I got a temporary credit on my checking accct. ie debit card used. waited 3 months for the permanent credit as the bank paid them the money but i had faxed 37 pages noting the MA state law against getting money before a modication is in place! and I filed with the Attorney General on this. copies to the bank on this too. I got my money back. In modification process, call the bank and talk to the legal dept only! ask for it~! my husband is on unemployment and it will stall my foreclosure after 9 months of waiting and no payments as we could not afford the large payments . follow up every week on your paperwork and do all the paperwork they ask for and keep copies of your own on EVERYTHING! good luck folks.
My husband and i have tried to do the loan modification on our own and the lender has giving me the run around. We don’t know what else to do we have a 80/20 loan with really HIGH interest rate. And of course we can’t refi. we and upside down loan. I have been talking to an attorney but they are asking for 2k and we are not a position to do so.What are other options?
You can always try to negotiate your self with your lenders.
My mortgage is held by Chase – we are not behind or having financial problems but due to declining home prices we cannot refinance for a better interest rate as we now owe slightly more than the home is worth. Called Chase – spoke w/2 representatives who independently verified that their Making Home Affordable refinance and modification programs require NO CLOSING COSTS or FEES at all. None. Not rolled into the loan. Just none. Then I confirmed that this is the RULE OF THE PROGRAM, not just Chase’s rule.
So you guys who are paying people for assistance? DON’T. There are scammers everywhere, companies/brokers/attorneys waiting to take your money for something that is FREE. Call HUD, or Fannie Mae, or Freddie Mac. But please don’t pay a “facilitator”.
If you have a really high interest rate on the mortgage of your home, you really have 2 options:
1. Negotiate the rate. Someone a couple of comments above me suggested it as well. This is fairly straightforward. Interest rates on anything, especially mortgage loans and credits cards are very negotiable.
2. Refinance your mortgage somewhere else. This is not for everyone, but it could help.
I am in the begining of a divorce and want to keep my house; but due to one income and my income was reduced since we bought the house. what are my chance of a loan modification?
Many of you bring up great points.
Yes, you can negotiate a loan modification with your current bank. However not all of us can get through to the bank, for those that have jus had enough and know they can qualify, you cna just hire a professional to help.
That’s what I am here for.
I can refer you to many HUD counselors or other people in the business that can do a loan modification with no upfront fees. There are some who collect a fee after the loan has been modified.
Email me with any questions or advice.
I NEED SOMEONE FROM HUD TO HELP WITH MEDIATION ON MORTGAGE MODIFICATION. A LIGIT HUD REP.
Lender are reluctant to mod your loan, i believe if you balance is somewhere near the market value, they wouldn’t help.
If you have visit foreclosure home sale, previous owner will destroy the home because they are pissed when their lender will not assist because the stimulus money is our tax dollars.
I don’t blame them for destroying the property, actually I support their destruction. Lender is not going to send you a thank you note for leaving the place clean and in excellent condition. If my place foreclose, I would do the same.