A hardship letter is what is usually required to get a “second chance” from a mortgage company. Most often, a property owner finds themselves needing to write this letter after they have fallen behind on payments. Most mortgage companies want to work with owners, and appreciate honest communication. Because of this, it is important to explain exactly what has been going on in your life, why you were unable to pay, and why you are certain that you can catch up and continue making payments as agreed. If nothing has changed, and you still cannot fulfill your debt obligation, then perhaps you should consider other options.
With that said, here are a few tips and guidelines to keep in mind when you get ready to write a hardship letter. Keep in mind, most companies are not going to feel sorry for you if you fell behind because you spent 2 months in Fiji and traded in your Honda Accord for a Mercedes SL 500. It is very important to remain realistic throughout this process. Financial hardship due to irresponsibility are generally not adequate excuses.
Step 1 - Gather the facts
The first thing that you need to do is gather all the facts that will support your case. Be honest with your situation and give the mortgage company reason to side with you and play nice. If you have lost your job, had a death in the family, or a substantial illness, you should gather proof.
Step 2 - Draft your letter
You want to keep your letter short and to the point. The person that is going to read your letter is likely very busy. If you write a 10 page novel, it will likely do more harm than good. You want to lay out the facts, briefly explain what happened, and briefly explain how you plan to get back on track.
You should use a standard letter format. Here is an example of how you can draft your letter:
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Name: (Your Name)
Address: (Your Address)
Mortgage Company: (Company name)
Loan Number: (your Loan Number)
To Whom It May Concern,
The reason I have been having trouble with my payments is because I (XYZ - briefly explain why..only 2-3 sentences. Also include a time frame)
The above mentioned situation was temporary and my situation today is (XYZ - let them know where you stand today. - make sure you give them proof that you can now afford to make payments)
You and any co-borrower should sign and date here.
—–
Thats it. Remember to keep your letter short and just mention the facts needed to get someone to understand that you are ready to get back on track. Good luck!