Writing a hardship letter can be a tough task. You need to put your best foot forward and try to convince the mortgage payment people to loosen the grip a little. But no matter what, it is an entirely formal ordeal and should be treated so.
A hardship letter is a sort of final plea to a mortgage company so that they may consider your situation and offer you a somewhat reduced or a more mutually agreeable mortgage payment alternative. It is usually a statement, an explanation as to why you have not been able to pay back the money owed to them for genuine reasons. The reason why hardship letters are so popular is that they offer a final chance to the person facing a foreclosure to stop it. Although the final decision on whether or not to accept the letter lies with the mortgage company, people do write it as a last gasp attempt to save their property.
Format and Sample
It is essentially a formal letter, although with certain differences. Firstly, a hardship letter can be a long letter describing in detail the setbacks suffered by the writer, with the end to convince the reader. So, unlike most formal letters, this one is most certainly not short and to the point. The letter ought to include the loan number and other details pertaining to the defaulted mortgage. It should start like any other formal letter, with the subject, and continue thus. A hardship letter is generally addressed to the mortgage company and written in an impersonal way. While it describes your situation, it should, at no point, delve into the more personal situations and letter writing tone. All through the letter, one must maintain emphasis on the facts, rather than a personal and detailed epic on the nature of financial problems faced. At the end of your letter, you and the cosigner of the loan (if any) need to put their signatures, so that the mortgage company will be able to authenticate the document.
Respected Mr. Jones,
I, Mr Smith, would like to request you to review my financial situation and see if there is any way for us to work out another payment option.
As you have seen, my mortgage payments on the business loan dated ______ have not been completed, owing largely to business failure, due to a sudden and irrecoverable damage to property.
I have sent my claim to the insurance company for the damaged property and am awaiting their evaluation of the money owed to me. The insurance company has meanwhile intimated to me that under the rules of the insurance contract, I am certainly liable to receive a substantial part of my claim.
But since I have not been able to continue my business activity, I have not been able to generate any revenues, let alone any profit to be able to pay the mortgage payments on the loan.
So I ask you to reconsider my position and rework our previous agreement so that I may be able to pay off the mortgage payments as soon as possible.
Hardship letters work as an effective mode of communication between the person who has taken a loan and the lender. And if the lender agrees to rework the terms of the loan, it can be beneficial to both parties.