What is a Hardship Letter?

What is a hardship letter? For those individuals who have gotten behind on their mortgage, you may have heard this term. A hardship letter is a letter you write to your mortgage holder essentially telling them what went wrong. You detail events that have forced you to become behind on the mortgage such as medical emergencies, job loss, or a personal emergency.

A hardship letter is your way of convincing the mortgage holder to work with you for loan modification. It is a requirement for a lot of mortgage companies that before they will even talk loan modification that you have to send in a hardship letter. This usually will be accompanied by financial statements, paycheck stubs and documentation of the circumstances surrounding the default. This would be something like the medical bills, documentation of your job loss, or receipts from the sewer line collapsing.

A few important tips to remember for drafting your hardship letter:

What's that old saying? You catch more flies with honey. Be nice to them. Don't draft an angry hardship letter about how their rates are outrageous and they are ripping you off. You are going to be dealing with these people throughout the loan modification process. Start off on the right foot.

Make sure to draft your letter with professionalism and maturity. This letter is asking your mortgage lender to work with you because you have fallen behind on your payments. You want to be straightforward with what happened. State "I can't pay my mortgage because I had unexpected medical bills..." Don't say "Well, I would've paid my mortgage but I got in a fight because my boyfriend cheated on me and I had to go to the emergency room...". You can show your emotion without sounding immature.

You will want to make sure to documentation of all correspondence and phone calls. Get names of the people you talk to. Mail the hardship letter certified. You will want proof that they received the letter. If you do end up in court over the matter, you want to be able to prove that you exhausted all means necessary before you finally defaulted on the mortgage.

Above all else, don't lie. The bank isn't going to take your word for it. They will demand documentation of the events that happened to make you fall behind on the mortgage. Don't tell them that you lost your job when you didn't.

Falling behind on your payments and facing foreclosure is a soul crushing experience. You may end up dealing with someone who isn't sympathetic to your problem. Try to keep perspective during the process. In this day and age of foreclosures, they read a lot of hardship letters. By now, they are probably numb to the circumstances of the average American.

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