How to Write Effective Foreclosure Letters

Foreclosure letters, also known as mortgage modification hardship letters, are typically required by a lender during the loan modification process. Foreclosure letters are an important part of the package that the lender will look at in deciding whether or not to modify the loan. Here are some steps that you can take in order to help you write effective foreclosure letters.

Difficulty: Moderately Challenging

Instructions

1. Gather data and be well informed about your financial situation.
   
   Effective foreclosure letters are specific – the lender will want to understand exactly what caused your financial troubles, and exactly how you think you can recover. Are you unemployed? What caused your unemployment (illness, business failure, downsizing, etc.)? How long have you been unemployed and what effect has this had on your ability to pay your bills? How will you support yourself in the future? If you are still looking for a job, outline exactly what you are doing in your job search. Perhaps you have a new job that will support your mortgage payment, but you are still struggling to pay past due bills. Whatever your circumstance, be specific and have numbers to back up your assertions.

2. Be truthful, but avoid painting an overly bleak financial picture for the lender.
   
   Effective foreclosure letters strike a fine balance between convincing the lender that you need help and persuading the lender that you expect to be able to recover and make regular, timely mortgage payments if your loan is modified. If you paint a horribly bleak picture about your financial future, your lender may not want to modify your loan. While lenders are increasingly willing to modify mortgage loans to mitigate their own losses in foreclosure, they will not do so unless they believe the borrower will be able to pay under the new terms of the loan.

3. Be truthful, but avoid painting an overly optimistic financial picture for the lender.
   
   Again, effective foreclosure letters must convince the lender that you are in need of assistance. If you have an income that will support your current mortgage payment, your lender may see no need to modify the loan. This is why it's important to explain the circumstances that led to your current predicament, and to emphasize that you are working to catch up on many past due bills.

4. Write in a respectful, conversational, straightforward manner.
   
   The tone of foreclosure letters is just as important as the content. Be cordial and pleasant, and write in a conversational way that will help your lender connect with you on a personal level. Avoid being overly stuffy or using technical or legal jargon.

5. Invite your lender to contact you to discuss the mortgage payment relief options that may be available.
   
   For many homeowners, talking to a lender can be intimidating, and downright scary. Nonetheless, it's important to keep lines of communication open. For the most part, lenders will be cordial and helpful through the process. Effective foreclosure letters let the lender know that you are open and receptive to working out a loss mitigation plan, and you are able and willing to discuss your financial issues to the mutual benefit of both the lender and the homeowner.