If your home is in danger of foreclosure, your best option is to write a mortgage hardship letter recommending a loan modification. Many of the current foreclosures were fully preventable. The last thing the bank wants is an enormous stock of foreclosed homes on their hands.
It’s much more preferable to negotiate a reasonable deal with you that will ensure the quickest financial resolution. It is important to keep this letter short and factual, clearly identifying the reasons you fell behind and stating your desire to repay the debt with a reasonable workout solution.
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Sample Letter to Send the Mortgage Company:
To Whom It May Concern:
I am writing this letter to request a modification of our default-status loan. When our adjustable rate mortgage increased in July of 2008 from 4% to 7.6%, our monthly payments skyrocketed $420 higher, causing our family to fall behind in our bills.
When the rate increased, my husband downsized his vehicle and I picked up a second job, but we still had trouble staying afloat. In August, my husband fell gravely ill with pneumonia, causing a drastic reduction in income for two consecutive months, thus negating the extra work I put in. We are currently providing for our six-month-old and our fifteen-year-old twins, whose future I am concerned about if we cannot restore our dangerously depleted resources.
Despite our best efforts, we have fallen short three mortgage payments, amid piling debt. However, we have every intention of paying what we owe and would like to request a loan modification to help us get back on track. Since the aforementioned event, my husband’s condition has improved and his regular hours at work have resumed. More specifically, we would like to request a rate reduction down to no more than 6%, which would provide us with enough money to meet our monthly mortgage requirements and satisfy other debts.
We feel this arrangement would be preferable for Wells Fargo too, considering our home has been appraised at $40,000 below market value and we are in a market highly saturated with foreclosures: Elkhart County had 1,150 foreclosures in 2008. Regardless, we have fond memories associated with our home and we would love to remedy the situation immediately so we may keep our beloved estate.
Attached you will find copies of our recent bank statements, tax statements, medical bills and pay stubs. Please review this information and get back to us at your earliest convenience so we can discuss a suitable workout option. We would like our account back in good standing with Wells Fargo.
Thank you for your consideration.
Borrower & Co-borrower’s Signatures
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What to Send the Mortgage Company:
Most recent pay statement from all jobs currently held