As part of your foreclosure hardship package, you’ll need to write a hardship letter to explain your situation and propose a workable solution that will allow you to exit foreclosure.
We offer a sample hardship letter below you can use to get started. You can copy and paste it into a word processing program right away. Make sure to make it fit your financial and family situation, however, and write it in your own style. Writing an effective hardship letter is the first step to opening the lines of communication with your lender or mortgage company, so it must be straight-forward and paint an accurate picture of what’s going on in your life.
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Suggested Hardship Letter Contents:
- Identifying information (for you and your mortgage loan)
- The type of workout (repayment plan, loan modification, forbearance, short sale, deed in lieu of foreclosure, etc) you would like to use to resolve your foreclosure. Include when you want it to go into effect, why you believe it will work, and why you are committed to making sure it works
- Describe your financial situation or hardship
- Provide a broad overview of your income and expenses. Explain any recent changes or if you expect any changes to happen in the near future
- Tell them how much money you have saved to offset any delinquency or to pay into a negotiated workout plan
- Tell them how and when to contact you
Example Hardship Letter
December 15, 2006
Your Mortgage Company
987 Lake Road
Wilmington, DE 09126
John and Susie Homeowner
1234 Anystreet Ave.
Hometown, MN 12345
Account number: 0098767989065433
Dear Mr. Wilcox:
We are writing today to ask for a forbearance plan with a potential loan modification to help us get our mortgage out of foreclosure. We love our house, our children are involved in church and school activities, and we both work close by, so we want to do whatever we can to keep our home.
John’s mother, who had been living with us for the last 5 years and had been paying $500 each month to help with expenses, passed away unexpectedly 6 months ago. John tried to work overtime at his job to compensate, but his company does not have the business to support it. Unfortunately, Susie’s position is salaried, so overtime is not an option.
We fell behind on our mortgage payments because of this loss in income. We have tried cutting our expenses every way we know how, but with rising gas and food prices, we’ve found it extremely difficult to make ends meet. John is looking for a second job, but has not been able to find anything after over two months of searching. Any partial payments we have sent you have been returned.
We have saved $3,200 as of December 1 and have this money set aside to repay on our mortgage should this plan be approved. Most of this came from the partial payments you returned to us. Our financial information is included with this letter for your review.
We propose a special forbearance agreement where you agree to accept a payment of $1,291 per month for the next six months. This is $500 less than our normal payment and the amount we are still short every month since John’s mother passed away. Six months will give us enough time to find another job and/or reduce our expenses more. At the end of six months, if we’re successful, we agree to begin paying our normal $1,791 per month mortgage payment plus an additional payment of $250 per month so our debt will be repaid within 12 months. If we have been unsuccessful after 4 months, we will put the home on the market so we can try to sell it before the end of the forbearance period. Should it not sell, we will be forced to renegotiate this workout agreement with you or sell.
John and I can be reached at the address above. Our home phone number is: (765) 276-0763. You can also reach Susie on her cell phone at: (765) 128-7265.
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Tags: hardship letter, loan modification, negotiation, workout plan