Loan Modification Hardship Letter Sample

Loan Modification Sample Hardship Letter

In the last segment we looked at what to expect when you contact your Lender. We also went over some of the documents you will need to have readily available and copied.

In this segment I will show you a sample hardship letter. Yours will probably look very different, but it will give you a general idea.

Stopping foreclosure with your lender - the hardship letter

A hardship letter is a written explanation as to what "triggered the event”. What is the reason you have fallen behind on your mortgage or foresee yourself falling behind? Why is a modification vital in helping you stop foreclosure? This letter will read like an outline or biography of your current “life” situation, along with the request for help.

Foreclosure- Hope is on the horizon
Foreclosure- Hope is on the horizon
  • Lender XYZ
  • Address

  • Your Name (s)
  • Property Address
  • Your contact phone #
  • RE: Loan Number
  • Hardship Letter

Dear Lender,

We are writing to you with a hope to get the support from you in order to keep our home. We purchased our home 7 years go with the hopes of growing old here. We refinanced our home in 2005 to consolidate bills and took an equity line in 2006 in order to remodel it and upgrade many needed outdated components including capital improvements of a roof and rotting siding. At the time, these upgrades increased the value of our home by approximately 15%.

We live in YOUR CITY, YOUR STATE. The Real Estate Market was hit very badly in our area and especially in our price range. I am an administrative assistant in the construction industry and my husband is a teacher. In 2006 I Lost my income due to the crash in the market and the decline of construction jobs. In 2007, I took on a second job along with part time work I have found with a smaller construction firm. I also went back to college to finish my degree in order to make myself more marketable in the future. My husband also took on extra income by teaching an extra class during the school year and summer school. This year we have been able to bring our income up to a point where we have been able to pay our mortgage, our other obligations, and buy the basics in life. We have made extreme cutbacks in every area of our personal lives in order to keep our mortgage current…and we have never been late on a mortgage payment or any other obligation.

Unfortunately, my income has slipped lower this year due to losing my job. My husband lost his extra class along with the opportunity to teach summer school due to school budget cuts. We are still making our payments on time and hope to continue to do so, however, we have the realization that when our loan resets, this will become extremely devastating to us, as it will be impossible to keep up.

We can’t refinance our loan in order to save our home due to the drop in equity in our area- approximately 25%. I have attached a new home valuation from the County of Assessor’s Office showing a reassessment value for our home as of June 26, 2009. We now owe $100,000 more than the current value of the home.

Based on our current income we are working hard to keep current with our mortgage, however, our mortgage will adjust next month. If our mortgage payment increases, we don’t know how we can make the payments based on our current situation. We are asking for a loan modification as we see our situation as long term or possibly permanent.

We drastically scaled down all expenses in order to make accommodations. we have made a family budget and are sticking to it. We now have $681.54 left in our savings account. We also have had medical expenses that we were not expecting and will need to repay those too. This will add an additional $300 a month to our budget obligations.

Our finances will not allow us to keep up the increased mortgage payment and it is impossible for us to refinance to better rates because of the tremendous loss in our home value... the future does not look promising. Please help us to save our home by allowing for either a lower fixed rate or a reduction in our principal balance at the current rate. Our desire is to remain here where we have our jobs and our friends and family.

Thank you for your kind consideration.


Your Name(s)

Your Signature(s)

As you look over the sample hardship letter for your mortgage, note these things:

  • Be as brief as you can, but explain your situation. This should be a one page letter, not one paragraph that says, "dear Lender, please modify my loan".
  • You are telling the Lender why you are writing, and giving an explanation about your loan situation. If you refinanced, briefly explain why.
  • You are explaining what has happened to cause the hardship. If your area was hard hit in value decline, explain this. If you have any facts about the drop in your home value compared to what you owe, include this.
  • Tell them why you see your situation as long term or permanent
  • Explain what you have done to date to remedy the situation- what efforts you have made/ are making to improve things
  • If you know what you want, ask for it. For example, you are in an adjustable rate loan and you would like to have the Lender "fix" the rate.
  • Give your support to the fact that you believe the solution you are suggesting will fix the problem. Help the Lender see that you can make the payments if they give you a modification.

Foreclosure is usually brought on by hardships:

Foreclosure List of hardships

  • Adjustable Rate Mortgage Reset(either pending or currently happening)
  • Illness
  • Business Failure or closure
  • Job Relocation
  • Job loss or reduction in income
  • Death of Spouse
  • Death of a Co-borrower
  • Other death
  • Incarceration
  • Divorce
  • Marital Separation
  • Medical Bills
  • Disaster or property damage (tornado, storm, earthquake, etc.)

If you have any other hardship not listed, explain to your Lender what it is. What they are looking for is the "Trigger Event". The thing that answers the question- "what is causing the problem?" This is your Hardship.

Foreclosure Timeline

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Comments 6 comments

anglnflt4ua profile image

anglnflt4ua 7 years ago from Bay Area, CA

This will be so helpful for a friend of mine...thanks!

bayareagreatthing profile image

bayareagreatthing 7 years ago from Bay Area California Author

I am so glad- my goal is to give as much information as possible so that others can benefit.

One addition to this- If a person was turned down previously- they should reapply until there is a resolve(either by foreclosure, short sale, or modification). The rules of the game are constantly changing!

Mrs. Obvious profile image

Mrs. Obvious 6 years ago from Northern California

good info. I am going through some of this right now. I am pretty far along in the process, but I will point others to your information. Thanks for a well-writtn hub.

bayareagreatthing profile image

bayareagreatthing 6 years ago from Bay Area California Author

I am sorry to hear that- I hope this will help. Look at the other hubs for more info. Thank you for passing it on to! God Bless you in your fight!

odochartaigh408 profile image

odochartaigh408 6 years ago from Campbell, CA

I lost my home in February. I only had so much money that I was able to put some of my furniture in storage. On the last day working against a deadline, my neighbours offered to store most of my clothes, suits etc. and what I could salvage from my kitchen, my all-clad ltd cookware, sentimental cups n mugs, my grandmother's waffle iron and my wedding pictures. A month later, after unable to reach me, my neighbours took my stuff and gave it to good will, so I really lost it all. I have been staying at a hotel and looking for a place to rent. Because of the foreclosure and damaged finances, my credit score is pitiful. When I apply for apartments, the check my credit and my credit score continues to plummet. I am not a douchebag, slacker or unable to be responsible for anything. My situation for falling behind was due to illness and my partner getting screwed out of being paid by a former employer.

All of this has brought on major depression that has been very debilitating. I am doing what I can to get this in remission. I have never felt this much shame, pain and embarrassment. What can I do now? Since the banks and credit bureaus control every aspect of our lives, what are my options?

bayareagreatthing profile image

bayareagreatthing 6 years ago from Bay Area California Author

odochartaigh408 - I just feel like crying. I am so sorry that you were treated this way. You should in no way feel shame or embarrassment! This is a situation that wasn't your fault. I have been to the bottom in life and found my way out. I can say with complete sincerity that God brought me through the pain and despair. You will survive this! Don't give up hope! A new day is just around the corner and life will change.

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    Hardship Letter Sample- This article is not meant to be considered legal or tax advice. For that, you will need to seek a qualified professional.

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