Hardship Letter to Mortgagor or Lender to Prevent Foreclosure
Definition and meaning
A hardship letter to a mortgagor or lender is a written request for assistance, submitted by homeowners facing financial difficulties that may lead to foreclosure. This letter explains the reasons for the financial hardship, outlines the homeowner’s current situation, and requests solutions such as loan modifications, repayment plans, or options to avoid foreclosure.
How to complete this form
To effectively complete a hardship letter, follow these steps:
- Begin with your contact information and the date.
- Address the letter to your lender or servicer by name and title.
- Clearly state your home address and account number.
- Explain your financial situation succinctly, mentioning any significant life changes.
- Request specific assistance, citing which options would help you—such as loan modification or forbearance.
- Include supporting documents to substantiate your claims of financial hardship.
- Conclude by expressing appreciation for their consideration and request prompt feedback.
Who should use this form
This form is intended for homeowners who are encountering unforeseen financial challenges that may jeopardize their ability to keep their homes. If you are experiencing job loss, medical emergencies, or other situations that affect your income, this letter can serve as a vital tool for communicating with your lender.
Common mistakes to avoid when using this form
When preparing a hardship letter, be sure to avoid these common pitfalls:
- Failing to provide clear and concise information about your situation.
- Neglecting to include your account number or incorrect information.
- Being overly emotional or informal in tone.
- Not attaching relevant supporting documents that can back your claims.
- Requesting too many concessions without demonstrating a willingness to work together.
What documents you may need alongside this one
Along with your hardship letter, you should include the following documentation:
- Copies of recent pay stubs or proof of income.
- Unpaid bills or notices of late payments.
- Bank statements from the last three months.
- Your last two years of tax returns.
- Any legal documents supporting your claim of hardship, such as termination letters or medical bills.
Key takeaways
A hardship letter to a mortgagor or lender can be an essential step in preventing foreclosure. It is important to clearly communicate the reasons for your financial difficulties, provide supporting documentation, and propose feasible solutions that could benefit both you and the lender. Staying organized and professional throughout the process can enhance your chances of receiving the help you need.
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FAQ
Your name, address, phone number and account number. The type of debt resolution you're seeking. Your financial situation that has caused you to fall behind in your payments. A detailed budget and your plan for making payments (if you want to keep your home)
Your name, address, phone number and account number. The type of debt resolution you're seeking. Your financial situation that has caused you to fall behind in your payments. A detailed budget and your plan for making payments (if you want to keep your home)
Keep the letter concise. Typically, lenders spend less than five minutes reading a hardship letter so it's in your interest to restrict the letter to a single page. Explain your situation. Keep your request specific. Restate your request.
Proof of income (pay stubs, offer letter, etc.) proof of other income (e.g., alimony, child support, disability benefits) an expense sheet laying out all your expenses. tax returns (two years worth of returns) profit and loss statement. current bank statements.
Hardship Examples. There are a variety of situations that may qualify as a hardship. Keep it original. Be honest. Keep it concise. Don't cast blame or shirk responsibility. Don't use jargon or fancy words. Keep your objectives in mind. Provide the creditor an action plan.
Make the letter concise. Do not write pages explaining your hardship. State your response to the hardship. You need to describe the steps you have taken in response to the difficulty. Clearly state what you want. You can include enclosures. The conclusion.
Some of the most common types of hardship are: job loss, pay reduction, underemployment, declining business revenue, death of a coborrower, illness, injury, and divorce.
Hardship Examples. There are a variety of situations that may qualify as a hardship. Keep it original. Be honest. Keep it concise. Don't cast blame or shirk responsibility. Don't use jargon or fancy words. Keep your objectives in mind. Provide the creditor an action plan.
Financial hardship typically refers to a situation in which a person cannot keep up with debt payments and bills or if the amount you need to pay each month is more than the amount you earn, due to a circumstance beyond your control.