MSU Extension

If you are unable to make your monthly mortgage payment or have missed several payments, contact your lender or loan servicer immediately. When unable to make a mortgage payment, too many do not know what to do or are afraid to face the problem.

However, if you do not contact them, they will contact you. In fact, you may have received a packet asking for you to provide financial information to determine if you qualify for one program or another in order to get your mortgage payments back on track. Sometimes these requests can add to confusion or anxiety. However, you can take practical steps that will help you face this crisis.

If you have received a packet from your lender or servicer, one of the documents that you will be asked to complete is a letter of hardship. If not, you can be proactive and begin putting your thoughts down on paper (or word processor). Your hardship letter will explain the hardship that has occurred that caused you to fall behind on your mortgage. Some simple steps you can take include:

1.  Facing the real problem. You are behind on your mortgage payments, but why? Did you lose your job? Did you close your business? Are you unemployed and your benefits have expired? Did you experience a major illness? Was there a death of a spouse? An incarceration? Do you have an adjustable rate mortgage and the interest rate adjusted causing the payment to increase beyond your ability to pay it?
2. Brainstorm your choices. Is the hardship temporary? Have you resolved the hardship (found a job, recovered from illness, started a new business, applied for and are receiving benefits, etc.)? Is the hardship permanent? Do you want to stay in the house? Do you want to sell the house? Could you make the mortgage payment if it was lower?
3. Once you know the problem think about, or discuss if someone else is involved, your choices and come up with a plan. Remember to support the plan and keep talking if it involves others.

Now that you have a plan, draft your hardship letter. Try to keep it simple.

• State the reason for the hardship in the opening paragraph. Include the specifics and declare your intentions in regard to the home.
• Explain how the hardship has ended, changed or is longer term. Explain the steps that you have taken or will take to solve the hardship.
• If your intent is to keep the home, you may request a reduced or suspended mortgage payment for a short period of time, a modification of the loan to reduce the payment by lowering the interest rate and/or reducing the balance of the loan.
• If your intention is to move, you may discuss options such as a short sale, selling the home for less than the amount of the mortgage, or giving the Lender the home by way of a deed in lieu of the Lender foreclosing on the property.

Make sure that you send your letter to the loss mitigation department of the Lender or servicer. If they have not provided the name and address of a contact person, contact them and ask who to send the letter to and make sure you have the correct address. Include your full name and loan number as well.

Finally, keep it short. Remember that your loan is one of many, so brevity may encourage a busy department to read and give attention to your letter. If you have followed the steps outlined above, you should be able to explain your situation in brief but specific terms.

A helpful online forum can be found online. Search for hardship letters. In addition, hud.gov has a very informative section under the topic of avoiding foreclosure.

Making improvements in your financial situation and facing money problems can be time consuming and difficult. If you have questions, or would like to find a housing counselor in your area, Michigan State University Extension has access to many resources. Visit the MI Money Health page for contact information and answers to your questions including communicating about money.