How to Write a Hardship Letter That Works With Any Lender

The hardship letter is the most important document that you submit to your lender. The hardship letter is necessary if you want your lender to agree upon a loan workout, short sale, deed-in-lieu of foreclosure, forbearance agreement, loan modification, and any other foreclosure solution that requires their cooperation. Your hardship letter presents your desperate situation to the lender when they consider your request for help. Given that fact, you need to make sure your hardship letter presents your situation in a way that screams, "You must help me!"

Before you begin to write your hardship letter, first consider what type of solution you are seeking from your lender. There are several ways to avoid foreclosure, some that will allow you to keep your home and some that won't.

An effective hardship letter will be personal and demonstrate your distressing situation. The reason for falling behind on your payments should legitimately be caused by things like a job loss, job relocation that leads to two mortgage payments, change of job, long-term health issue, or a death in the family. You cannot be afraid of any embarrassment involved with telling your story. Remember that financial hardship falls upon everyone: rich and poor, old and young, strong and weak.

Be detailed in your hardship letter on how you got into your situation and state examples of ways you have attempted to keep up with payments such as tapping into your savings, retirement funds, and renting rooms. If you cannot rent rooms because you have a family, then mention that as well. After you have explained the steps you've taken, then admit that you have been forced (with no other choice) to ask the lender for help. Do not forget to be detailed, personal, and heartbreaking with your story. Remember that human beings are reading the letter and there is some level of compassion involved with their decision.

You should also remind the lender that working with you on a forbearance agreement, short sale, loan workout, etc. is much better than letting the home go into foreclosure. If your situation is temporary, and you want to keep your home, tell the lender you will be able to afford future payments once you get out of our current situation. Assuming you can get out of your situation within six months, then lender may be more inclined to consider a workout.

Lastly, do not lie on your hardship letter, because everything you said must be backed up with bank statements, credit card bills, and other documentation. The lender will probably look through finances more thoroughly than they did when making the loan. If you lied on your loan and the lender figures it out through this process, you may be turned over for mortgage fraud.

Should you still be confused or need additional guidance on how to write a short sale, then I suggest you read hardship letter templates and examples on foreclosure help websites.