A mortgage hardship letter is the medium through which you tell your mortgage lender that you seek a change in your payment obligation. This letter often serves as official notice that you are unable to make payments and is often required by the lender before they will consider adjusting the terms of your mortgage.
Hardship Letters Explained
Through a mortgage hardship letter, borrowers tell lenders that they are unable to make their mortgage payments. This letter describes the event or reason for their inability, examples of which include being recalled to active military duty, death of a co-borrower, divorce, property damage, job loss or an illness. In the letter, the borrower may request a loan modification, payment abatement period or another type of relief.
Generally, it follows the format of a basic business letter: introduction, descriptive paragraphs and a conclusion. The difference is that, in the conclusion, the borrower makes a request. It is typed, signed and dated by the borrower, and should not be emailed. It is sent to the bank or mortgage lender and becomes part of the borrower's file upon receipt. Preferably, to ensure that the letter is timely reviewed, it should be sent to a specific loan manager and not to the general attention of the bank. It should also be sent to the existing loan management office and not a bank branch or other location.
A hardship letter is typically very short and contains only the information essential for the bank to begin working on granting the requested relief. At most, it should be two pages long.
Customizing a Hardship Letter
A hardship letter should be customized for each specific situation. This means that the borrower should provide any information that is unique to their loan, its previous management and the borrower's current hardship. The letter does not need to stand out from other letters or catch the lender's eye, but should present the situation so that the lender can adequately respond.
Example of a Hardship Letter
August 1, 2011
Mortgage Lender
Attn: Mr. John Smith, Loan Manager
456 First Avenue, Suite 3
Best City, USA 67890
Re: Loan 123-456789 for property located at: 123 Main Street, Any Town, USA 12345
Mr. John Smith:
I contact you today to explain the circumstances that cause me to become delinquent in my mortgage payments. Under our current mortgage contract, my mortgage payment of $1,000.00 is due the first of each month. It is a 30-year fixed mortgage, due to expire in 2030. As such, there are 19 years remaining on it. My last payment for the full amount was made on June 1, 2011.
Unfortunately, due to losing my job in January, 2011, I am unable to continue to meet this obligation. My former employer closed their doors in January, resulting in its entire workforce becoming unemployed.
At this point, I have exhausted my financial resources and am unable to make further payments. I am deeply committed to fulfilling my contractual obligation for this mortgage, and seek assistance from you. I believe that my situation is temporary and expect to have full-time employment by the end of the year. Therefore, I seek a modification to my loan payment. This modification will enable me to continue to pay you a portion of what I owe, retain the property and, subsequently, pay you the entire amount of the mortgage.
I look forward to speaking with you about my request. I truly believe that a modification is the best solution to this problem and also one that we will both find beneficial. Please contact me at your earliest convenience at the mailing address or telephone number listed above.
Best Regards,
Sarah Borrower
Writing Your Mortgage Hardship Letter
The letter provided above can serve as a template for your hardship letter. However, remember to customize it so that it adequately explains your situation. Send it to your loan manager by certified mail so that you can track its delivery. If you do not hear anything after two weeks of its delivery, contact the recipient to discuss the lender's response to your request.
If your request is denied or special circumstances lead you to believe that a hardship letter is insufficient for your situation, seek legal advice. An attorney will review your legal and financial obligations and discuss your options with you.
