Man on laptop at table drafting a financial hardship letter.

Financial Hardship Letter Example For Mortgage Assistance

4-Minute Read
Published on August 8, 2022
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If you’re in need of mortgage assistance, there are options available to you. One of those options involves writing a financial hardship letter. A financial hardship letter is a written document for your lender explaining your circumstances and why you’re unable to meet your financial obligations.

We discussed with professionals in the mortgage and real estate industry and gathered tips on what should be included and how to write a hardship letter for mortgage assistance. Contact your servicer before writing a letter. Your servicer will advise you if a hardship letter is necessary.

For Rocket Mortgage clients, the Application For Success replaces a traditional hardship letter and can be found when logged into your Rocket Account. The information below is a general overview of hardship letters. Read on for some expert tips or simply jump to your desired section below.

Table Of Contents

Do I Need To Write A Hardship Letter?

Financial Hardship Letter Example

How To Write A Hardship Letter: 6 Tips

What Is A Financial Hardship Letter?

Do I Need To Write A Hardship Letter?

There are times when you may not need to write a hardship letter to receive financial assistance. Reach out to your service provider to see if a hardship letter is necessary for assistance.

If you have loans serviced by Rocket Mortgage® and can’t make your mortgage payments, you may fill out our Application for Success. An additional hardship letter isn’t necessary for this process.

If you’re currently having difficulty in making your mortgage payments due to certain circumstances, you may have options for assistance. If you have a home loan with Rocket Mortgage®, fill out the Application for Success

Financial Hardship Letter Example

Anatomy Of A Financial Hardship Letter infographic that is described in text below.

The typical format of a financial hardship letter is as follows:

  1. Accurate contact information
  2. Introduction: Who you and/or your family are
  3. Explanation of your situation
  4. Closing statement thanking them for their time
  5. Signature

 

After your letter is complete, it must be addressed to your lender. The letter may be mailed to your lender’s office or sent electronically via email. We recommend you check if your servicer requires a letter of hardship before submitting one. If they do require one, use the financial hardship letter example below as a guide or template for your letter.

If your service provider doesn’t require a letter of hardship, they most likely will want a list of monthly expenses. Below are examples of expenses you should detail to your provider.

  • Medical assistance
  • Transportation
  • Housing Utilities
  • Student loans
  • Pets
  • Food
  • Transportation
  • Insurance

 

Remember to be as accurate as possible. For example, if you have monthly medical expenses, you should have evidence like medical bills to support them.

How To Write A Hardship Letter: 7 Tips

Be mindful of the specific tips and advice below as you work through writing your letter. 

Include accurate contact information

It’s crucial to make sure the contact information you include in your letter is accurate. This better ensures your server will be able to contact you. We recommend doing a read-through of your letter for any errors before sending it to your server.

Be personal, but keep it semi-formal

It's best to be semi-formal in tone and specific in facts when writing this letter. While you may be feeling some very real emotional distress at the prospect of losing your home, the key here is to prove you qualify for a financial hardship exemption.2

Remember to be original with your letter. You can use templates and examples – like the one we included above – for guidance, but your letter should be genuine and unique to your circumstances.

Keep the letter short and concise

While it may be tempting to embellish your story or provide a full backstory, be concise, straightforward and honest with your letter. Keep the letter simple and direct with basic language to ensure it’s clear. Ideally, it should be one page (or under 450 words), so don’t go into any unnecessary details.3

State the problem

You’ll need to explain exactly what is causing your delays or inability to make your mortgage payments. Don’t add extra fluff – be straightforward and honest with your answers.

Focus on the most important reason for assistance if there are multiple reasons why you can’t make payments. This will make the biggest difference in helping you get approved for a modification or refinance loan.4

Provide enough evidence

It’s important to provide as much factual information as necessary so your lender can get the full picture of your situation. You should include details about your income, assets and expenses.

 

Your servicer may just need a compilation of these various documents, rather than a hardship letter. It’s best to reach out to your lender beforehand to see which documents and information are necessary to send. If you have a Rocket Account, you can fill out the Application for Success instead.

Commonly requested documents include: 

  • Recent pay stubs
  • Form 1099s or W-2s
  • Current and previous year’s tax returns
  • Bank statements
  • Medical bills
  • Employment termination or relocation letter
  • Death certificate
  • Divorce or separation agreement paperwork
  • Military orders
  • Proof of incarceration

 

Lenders will often request documentation to verify the information in the letter, so it’s important to only include accurate information.1

Include an action plan

You need to focus on your objectives and make it clear to your creditor that you have a plan they can help you with. Tell the creditor what you need help with and how to facilitate a solution to your financial issues. 3Keep in mind the options available to you will depend on what you are approved for and what your lender thinks you can do.

For mortgage relief, you may receive mortgage forbearance and deferment plans. Forbearance will allow you to temporarily pause your mortgage payments to give you time to catch up on finances. A deferment may be offered as well, which will push the payments you missed during the forbearance period to be due at the end of your loan term.

Below are some common options but they aren’t always guaranteed. Speak with your servicer first to see what options they have available for you.

  • Increasing interest rates, but extending the loan term
  • Reducing payments
  • Lowering the interest rate
  • Forgiving late fees

 

For example, you could ask for your monthly payments to be put on hold for three months or request to speak to them to discuss your options.

Have your letter reviewed before sending

We recommend having your letter reviewed and proofread by a close family member or financial coach before sending it. This will help ensure you’ve included all the necessary details and that it’s free from grammar and spelling errors.

Remember, the letter should be addressed to the lender, and it’s important to include your contact information in case the lender has any questions. Finally, the letter should be signed by you, or the person requesting the hardship arrangement.

What Is A Financial Hardship Letter?

A financial hardship letter is a document in which you can detail your financial situation for your lender in hopes of getting a payment extension or reduction.

This letter should explain your current financial situation and why you’re unable to make payments. It should provide specific details about the hardship, such as when it began, how it was caused and how long it may continue. 1

When Would You Need A Hardship Letter?

A financial hardship letter may be needed when unfortunate events outside of your control keep you from being able to pay your mortgage. This letter aims to let the lender know why you failed to fulfill your monthly responsibilities.5 Some examples of situations your mortgage lender may consider a financial hardship include: 

  • Serious illness or injury that results in extensive medical expenses
  • Natural or man-made disaster
  • Death
  • Military deployment
  • Incarceration
  • Sudden reduction of income
  • Job relocation or layoff
  • Divorce or legal separation

  

Sources

1Direct communication with Cliff Auerswald, president of All Reverse Mortgage

2Direct communication with Martin Orefice, CEO of Rent To Own Labs

3Direct communication with Baruch Silvermann, CEO of The Smart Investor

4Direct communication with Daniel Barrett, CEO of Adwords Nerds

5Direct communication with Jasen Edwards, chair of the Agent Editorial Board at Agent Advice