How to Write a Mortgage Hardship Letter
Can’t afford to make ends meet anymore? The first step in saving your home may be to write a mortgage hardship letter. If your lender doesn’t understand your situation, there is no way that they can help you.
While lenders are tough to negotiate with, they will occasionally realize that it is in their best interests to let you stay in the house at a lower rate.
After all, if you leave the house, it will probably be empty for a long time in this economy, and then the lender will make nothing.
So with that in mind, start composing your financial hardship letter, explaining why you can’t continue to pay your mortgage at the rate which the bank has set.
Start out your financial hardship letter stating that you have done everything in your power in order to pay your mortgage on time, but that you absolutely have no choice but to ask for a renegotiation in your monthly mortgage rate or your interest rate.
Explain that your number one priority is to stay in your home and that you will do everything you can to work with the bank to make that happen.
Was your setback a temporary one or was it a permanent one resulting from a long term change in your income? If the former, briefly explain what happened and why falling behind was unavoidable.
Next tell the bank that you intend to pay everything you owe, but that it is literally impossible at the present time. Tell them you expect your situation to be temporary and that you will eventually be able to return to paying the full amount.
If your setback is permanent, explain what happened and why, and also why you don’t expect it to change.
Here are some of the many situations the bank may take seriously:
- severe illness or injury
- loss of a job or hours
- failure of a business venture
- death of a spouse or family member
- time spent in jail or prison
- end or separation of a marriage
- military job requirements
- property damage
There are many other reasons which may qualify. The general rule is that the reasons you give need to be financially and emotionally taxing, and also out of your control.
At this point, specifically demonstrate that your income is exceeded by your monthly mortgage, utilities, and food bills. Don’t include any frivolous expenses (you can’t afford those anyway, right?).
Show in the letter you are in the red, and calculate how much of a modification you’d need in order to be in the clear.
Close by saying that you think a loan modification of the amount requested would benefit you both, and thank the lender for its consideration. Even if you don’t get a modification from the bank, keep trying—sometimes these things take many attempts, and either way you’ll probably at least get a stay of execution.
Take other actions at this time as well, like writing your congressmen and applying for federal programs. Good luck working toward saving your home from foreclosure.