How to Write a Foreclosure Hardship Letter

Posted on August 26, 2008
Filed Under Foreclosures |

The purpose of a foreclosure hardship letter is to demonstrate to the loan giver the reasons the homeowner has not been able to remain current on their payments. The lending party might then decide to offer ways to avoid foreclosure like modifying the loan or short sales for example. Banks and other lenders have special employees whose job it is to look into applications made by homeowners, who are having difficulties paying their loan, such employees are called Loss Mitigators. When the Loss Mitigators are convinced that a payment plan can be found so that the lender gets back most of what is due to them, they can decide to not go into foreclosure. In other words, in situations where a homeowner is behind in payments, the fate of their home lies in the hands of the Loss Mitigators and it is very crucial for them to realize this fact.

One such payment plan is to modify the loan so that the homeowner pays more money every month to compensate for the delayed payments which is suitable when the loan receiver has been through a temporary period where they were not able to make the payments for example a period of time when they were without a job . When they get a new job for example they become able to afford the cost of the new modified loan.

In order to benefit from these “home-saving” solutions it is necessary to compose a foreclosure hardship letter and present it to the Loss Mitigators. The letter must be comprehensive and convincing on one hand and concise on the other hand, that is why many people find it difficult to write. Here is a general outline of such a letter:

1. Open by declaring the status of not being current on loan payments

2. In the next segment cite reasons why it has been very difficult to meet the monthly payments.

3. Request the assistance of the lender through an alternate payment plan like short sales or modified loan.

Here’s a sample letter

John Doe

#1 Street St

City, State, Zip

Jack Smith

Lender

#2 Streets

City, State, Zip

Dear Mr. XXX

I am writing to you to explain why I have been late in my payments recently on the loan I took out on the property I own which is located in.

Recently meeting the payment requirements has become more and more difficult for me due to ( reasons like added healthcare costs , employment problems etc ) until finally I have not been able to make the payments for several months in spite of my wishes to make good on the payments I owe you .

I am hoping to receive a (modified loan, short sale) that would enable me to fulfill the required payments and I assure you of my commitment to paying what is due in full. Please consider my application as soon as possible.