A hardship letter is a letter that you draft to a mortgage holder or another type of lender to explain a financial setback. The letter typically asks for assistance in keeping a loan out of foreclosure, an adjustment in debt interest or payment amounts or the forgiveness of debt repayment penalties while you get back on your feet. Before you sit down to write your hardship letter, there are a few ideas to keep in mind to win your lender's sympathy and support.
Format
The hardship letter follows a simple format. To begin, you should provide complete contact information, including street address, cell phone numbers and email address. In the first paragraph, you should acknowledge the debt, state that you know you are behind on payments and ask for the type of assistance you want, such as a loan modification, extra time to catch up on payments or a short sale. In the second paragraph, you should explain your hardship. If you can honestly do so, tell the lender that the problem is time-limited and that you are even now working to resolve it. In the third paragraph, wrap up the letter by repeating what you want and indicating a willingness to look at other options the lender may suggest.
Length
Even though your story may seem very complex to you, most lenders don't have time to read long, detail-filled letters. Try to keep your letter to a single page or to an absolute maximum of two single-spaced, typed pages. The bulk of your letter should be devoted to explaining your hardship and how you want to work with the lender to deal with it.
Deal in Facts
The fear of losing a house is understandably a very emotional experience, but most lenders are not moved by tears, pleas, assurances that nothing like this has ever happened to you before or paragraphs detailing your innermost feelings. You are dealing with the business world, so make sure your letter is professional, not chatty or melodramatic. Discuss what has happened in your life to create the hardship and how you want to address it. For instance, you might write, "Our mortgage is past due for three months because my husband has not been able to work due to a back injury. We anticipate that he will be able to return to work part time next month, but he will only be making half of his regular salary. Therefore, we are seeking a loan modification to lower our payments and allow us to keep our home."
Acceptable Reasons
Many life changes can throw a person off-balance financially. Some of the more common reasons people use when they are asking for temporary relief from their mortgage or other debts are illness or injury, job loss or other economic downturn, death of a co-borrower, divorce, incarceration, military duty or separation, medical bills and property damage.
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