Writing A Hardship Letter For Rental Property

If you own an income property and it is still under a mortgage, there are certain situations in which you may find yourself incapable of paying the amortization. If this situation is beyond your control, which means you are experiencing true hardship, it may be possible for you to avoid foreclosure on the property by appealing to the goodwill of your lender. To do this, you have to write a properly formulated letter.

Tips in Writing a Hardship Letter for Rental Property

A hardship letter is a formal letter and must be treated as such. Address it properly, make sure it is proofread, and send it via registered mail. Keep copies for yourself so that you have a paper trail of your correspondence. Show that you are willing to come to an arrangement and there is a chance that your lender will feel the same way.

Start your letter by explaining that you are aware that you have not been making the necessary payments on your property, and that you hope to remedy that by being able to come to a mutually satisfactory arrangement. State that you wish to avoid foreclosure, but that you are currently experiencing financial hardship. It is very important that you are specific about the nature of your hardship, and that you include documented evidence for it. Examples of acceptable hardship include:

  1. Loss of employment or involuntary reduction in hours and income
  2. Death in the family
  3. Medical bills
  4. Sudden illness or disability
  5. Incarceration
  6. Separation or divorce

What to Include in the Hardship Letter for Rental Property

Explain that the money that you currently have as an income has to cover a number of bills. Include copies of all your bills, such as for medication, home mortgage, car payments, and food. Make it clear that you have worked hard at reducing your expenses by giving up on life’s luxuries, and that you have tried to increase your income, for instance, by taking on a part time job. However, despite these efforts, you still find yourself in a situation that makes it impossible to keep up with your payments for the rental property.

State that the property in question is one that provides you with rental income. Indicate when you rented out the property and for what monthly amount. If you don’t have tenants in the property or if there are a lot of vacancies, remember to mention that. If tenants are present and they pay their rent on time, explain why this still is not sufficient for you to keep up with the payments.

Suggest a Mutually Acceptable Solution

You must then provide a solution that you believe to be acceptable for you and the lender for the payment of arrears. State whether it is your desire to keep the property, or whether you would be happy with selling it, perhaps through a short sale. If you want to keep your property, make an offer of reduced payments, showing an amount and specifying for how long you would be doing that. Do not promise an amount that you really cannot afford in your current situation. Also, offer a repayment plan for the shortfall when you finally get back on track, again only offering to pay what you expect your future finances will allow.

Hardship Letter For Rental Property Example

{Your Name}
{Your Address}
{Your Phone #}
{Your Loan #}


To Whom It May Concern:

I am writing this letter to explain the reasons why I have been unable to pay my mortgage payments on the property at {address}, and to inquire as to what I can do to avoid foreclosure on my property.

My income has become significantly reduced recently, due to {sickness, death in the family, job loss, etc. BE SPECIFIC}. The money I have remaining every month must go to {food, car payment, mortgage on home, medication, etc.}. I have done everything in my power to keep up with the payments, but it unfortunately has become impossible {or will become impossible as of a certain date}.

I have been using this property as a rental income property for {length of time}, and I {do/do not} currently have tenant(s). {If you have tenants, indicate the amount they pay in rent each month, and why this is still not sufficient to keep you up to date on the mortgage} .

I believe I can resolve my debt by {your solution to “working out” the debt, or a request that they provide the solution}.

Please understand that I know I signed a contract and that I am responsible for these payments, but there is also only so much I can do with the little money I currently have.

It is my intention to keep this property if I can, so I hope we can work out a solution as quickly as possible.

Thank you,

{Sender Name}

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