Foreclosure Hardship Letter – Format for a Loan Modification Request

A very important part of your loan modification or short sale package is the foreclosure hardship letter. When facing a foreclosure, these papers are turned into the Loss Mitigation Department of your financial institution. Loan modifications are available for homeowners who have found themselves on a path leading to defaulting on their loan. Short sales are available to homeowners who are already past that point and unable to make their payments. Financial institutions who allows the short sale is agreeing to allow an amount less than what the payment amount usually is to be paid.

For many, the foreclosure hardship letter is the hardest part of the loan modification or short sale. It can be very difficult to put down on paper what you current situation is and what it is that has caused you to find yourself in this position. Many are afraid of the hardship letter. They may not know how to word what they wish to say or what the correct format of the letter should be.

Short sales and foreclosure are taken care of by the Loss Mitigation Department at your financial institution. The employees who work in this department are known as Loss Mitigators. You must get approval from the Loss Mitigator in order to send in a loan modification or short sale package.

You will have plenty of chances to talk with your Loss Mitigator. They specialize in dealing with homeowners in your same type of situation each and every day. Taking advantage of making a relationship with your mitigator will help you to understand what he or she is wanting from you. The loss mitigator has the right to approve or deny you so always make sure you treat them with the utmost respect.

Your foreclosure letter will be read by your loss mitigator. These individuals handle tons of letters daily, so it is very important to be precise and get to your point and not ramble on.

When you write your letter, you can either write it out or type it. Remember how important this letter is and take all care to make it easily readable and that it makes sense.

Most experts choose the business format for this type of letter. Below is the layout that you should use:

September 5, 2009

RE: Your Loan Number (include either Loan Modification or Short Sale)

Dear Mr. Jones,

We are contacting you regarding requesting a loan modification for our home that is located at – 345 Any Street, Your City, State. We would like the chance to let you know the situatin that we have found ourselves in that has caused us to fall behind on your monthly payments. Even thought we have done everything within our power to rectify our situation, we still find that we are short on the amount we owe to you.

The reason we have defaulted on our payments is……(ENTER YOUR REASON). We have found that at this point in time we do have have enough funds to pay the monthly payment amount. We are worried that if we call any further behind on our payments that we will not be able to catch up. We do have every intention of repaying what we owe, but at this point in time we have no way of being able to do this. Therefore, we are contacting you to see if you may offer us some help.

We are asking for you to consider a temporary reduction or suspension of our monthly payments for a few months, or to allow us the option to short sell our home. With doing this, we are sure to get back on track. Our house means a lot to us and we would like to work to keep it from being put into foreclosure. Please let us know all the options you are willing to extend to us to stop a foreclosure at your earliest convenience possible. We are very anxious to come to an agreement and would appreciate very much a prompt response.

Respectfully yours,

It is very important to mail your hardship letter to them through certified mail with a requested return receipt. This will make sure you have proof that the letter was mailed out. The return receipt must be acknowledged and signed by someone who is at the financial institutions and the card will then be returned to you via regular mail.

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