A hardship letter is something most lenders will require delinquent borrowers to write before considering loan work-out options.

A financial hardship results from an involuntary reduction in income or an unavoidable increase in expenses. Lenders are likely to consider:

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  • Mandatory reduced hours or hourly wage
  • Underemployment after loss of previous job
  • Death of a borrower
  • Decline in business earnings if self employed
  • Permanent or short term disability
  • Serious illness of a household member
  • Divorce
  • Unemployment
  • Major medical expenses
  • Disaster
  • Urgent property repairs
  • Increase in child care expenses
  • Mortgage loan and payment changes

Keep your hardship letter brief and to the point: four paragraphs is ideal, and no more than two pages.

Be sure to include:
  1. Homeowner name(s), address(s), and phone number(s) and relevant loan number(s).
  2. Relevant details about the loan or property, such as the number of months delinquent, property value, or equity.
  3. The reasons for failing to keep current with your monthly payments. Be matter of fact.
  4. An overview of your financial situation. This should include: actions that you have taken to reduce expenses and increase income; financial counseling or other steps that you have taken to resolve the situation; the amount of money that you have saved to pay toward the delinquency.
  5. Brief outline of your desire to prevent foreclosure. Your hardship letter is a negotiation first and a explanation second. If you seek a loan modification, list the reasons why you believe you will succeed in coming current on their mortgage payments; if you seek another solution, such as a deed in lieu of foreclosure or short sale, propose that solution here.
  6. Relevant documents, including:
    • information about the monthly gross (pre-tax) income of your household.
    • your most recent income tax return.
    • information about your savings and other assets.
    • your monthly mortgage statement.
    • information about any second mortgage or home equity line of credit on your home.
    • account balances and minimum monthly payments due on your credit cards.
    • account balances and monthly payments on your other debts and personal loans.

Be Humble and appreciative. Don't get into any blame games or side issues. Be respectful and thank the lender in advance for considering your situation.

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Get started Visit our Loans Center Get the help you need, whenever you need it.