How to Stop Foreclosure With a Hardship Letter

Falling behind on your home loan payment doesn't trigger an automatic foreclosure. Lenders offer different types of assistance (short sale, loan modification, forbearance) to help borrowers avoid mortgage foreclosure. But before receiving assistance, lenders need to see a written hardship letter.

Instructions

1. Begin with your name and other personal information. Write all names listed on the mortgage loan, address of the property and account number of the mortgage loan.

2. Highlight the reason for writing the letter. Your mortgage lender likely receives numerous requests daily. Mention early on that this is a hardship letter in order to receive mortgage assistance to avoid a home foreclosure.

3. Provide an explanation of your situation. Lenders don't offer mortgage assistance to everyone, and people asking for help need to demonstrate financial hardship. Be specific and explain why you're behind on your mortgage payment. Reasons to list in a hardship letter can include loss of employment, death of a breadwinner, reduced work hours or medical illness.

4. Ask for specific help. Propose a solution in your hardship letter for the lender to consider. For example, you can request a short sale and sell your house for less than the mortgage balance; a loan modification to reduce your mortgage interest and payment; or forbearance to temporarily stop making house payments.

5. Include dates and whether the situation is permanent or temporary. Hardship letters need include an approximate period of when financial troubles began and if you anticipate a change of circumstances in the near future. This information helps lenders determine the best course of action.

References

• American Foreclosure Specialist: How to Write a Hardship Letter
• Bankate; What You Need to Get Foreclosure Help; Holden Lewis; March 2006