What Is A Hardship Letter?

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If you are wondering what a hardship letter is, then you may already be behind on your home mortgage. Perhaps times are tough, you lost your job, you have become disabled or injured in an accident, a loved one has become ill, or you are just drowning in credit card debt. You can no longer afford to pay the loan on your home. If you do make your monthly mortgage payments, you have to do without other necessities like food and health insurance, or you can then not make good on your other financial obligations such as personal loans or college student loans. In other words, times are not good. You can even say that you are suffering from a "hardship". See where we are going with this?

Cutting to the chase, a hardship letter is something most mortgage companies will require to consider you for a work out or home loan modification. You are basically asking your home loan mortgage company to give you another chance before seeking a foreclosure on the property. You are not trying to argue with your lender on how they have put you under this financial hardship with their loan terms, but rather you are simply seeking to modify the current agreement so that you can remain a faithful customer that pays the loan note on time every month.

Please do not even consider lying in the hardship letter. You should be accurate and honest to the best of your abilities. To do otherwise could lead to a fraud prosecution, and your situation is already hard enough without that.

The goal of the mortgage hardship letter is to explain to your home loan company that you fell behind on your house note, but the situation that caused you to be late on your house mortgage was temporary. You should explain to the lender that your situation has changed so that you will be able to make your monthly payments, once you and your lender come to some sort of agreement (possibly a home loan modification).

You need a reasonable and realistic reason for being late on your mortgage payments. Stating that you got hooked to Starbucks is not going to cut it. You must show your loan company or bank that your reason for falling behind on your loan was legitimate. Some legitimate excuses that may apply in your situation are a disability, death in the family, or loss of a job. All of these explanations are legitimate, rational, and reasonable excuses for being late on your mortgage payments, and are perfect foundations for a home loan hardship letter that seeks a mortgage modification.

While hardship letters may be written for a number of mortgage adjustment requests, some common examples of mortgage loan modifications that you may wish to seek are: reduced interest rate, removal of past due amounts, preventing a future rise in the interest rate on an adjustable rate mortgage (ARM), or allowing you to skip loan payments for a few months to catch up on your bills. While hardship requests are not always approved, they are not always rejected either. If you have a valid reason for being late, write a good letter that explains your situation clearly (see sample hardship letter for some excellent examples), and remain honest and upfront in the process, your chances of getting the mortgage hardship request approved are excellent.

Answering "What is a hardship letter" succinctly, it is a written request that is made by the obligor to the obligee which seeks a modification in the terms of the loan contract, due to extenuating circumstances that have burdened the obligor's ability to perform his contractual duties, so that the obligor does not default on the agreement, if the adjustment to the terms are accepted by the obligee and ratified by both parties. Does that make sense? If not, just read the earlier paragraphs a few more times until you get it.

Now you know what a mortgage hardship letter is. If you have any questions or additions to make, I would be happy to help or argue with you, however the case may be.

P.S. Thank you Zino for this mortgage forum! Just trying to "pay it forward" my friend.