If you are facing financial difficulties and are seeking to renegotiate your mortgage, you will have to write a hardship letter. This letter explains your situation to your lender so they will fully understand why you are unable to make your mortgage payments as agreed.
If your letter is compelling and your negotiation goes well, you may be able to come to an agreement with your lender that will help you avoid foreclosure.
Keep your hardship letter brief
Your letter shouldn’t be longer than one page. The lender’s loss mitigation department is staffed by busy people who have to deal with a lot of paperwork. Your letter should be brief and clear. Don’t bog them down with too many details or go off on long tangents. Do include specific dates when talking about your situation; if you lost your job or were diagnosed with a serious illness, state specifically when these things happened.
Keep your letter honest
Don’t exaggerate or make false claims. You lender will eventually uncover the truth and your negotiation will quickly break down. Be direct and honest, and make sure your communications with your lender are consistent; don’t tell them one thing in your hardship letter and then something very different if you talk to them on the phone.
Part of being honest is sharing things that might be uncomfortable to talk about. If your letter shares your honest feelings about your situation, then your reader is more likely to be sympathetic to you. Be genuine in thanking the reader for taking the time to consider your situation, and make it clear that you are fully willing to do what it takes to come to a successful workout. You definitely want to have some kind of plan for how you are going to make your new payments going forward.
Structure your letter
Don’t write a page-long paragraph. Use basic structure that will make your letter easier to read. At the beginning have an introductory paragraph and the end you have a conclusion. In between, the body of your letter should have three or four paragraphs. That means you full, one-page letter will have 5 or 6 paragraphs.
If you are trying to avoid foreclosure, you should be working with a HUD-approved housing counselor. Ask your counselor to look over your hardship letter before you submit it to your lender. S/he will be able to give you valuable feedback about what should be included in your hardship letter and what you should leave out.
No matter where you are in the foreclosure process, be sure to read our free Preserving Homeownership/Foreclosure Prevention ebook, and talk to one of our HUD-approved housing counselors free of charge.