Writing a Stop Foreclosure Loan Request Letter (Free Sample)

Top Requests

According to the U.S. Government, there are some things homeowners should do when they first realize that foreclosure is imminent.

They should always answer letters from their lender and not ignore them, hoping the problem will somehow go away.

Court Documents

Any court documents or requests should not be ignored. Homeowners should stay in their homes. If they leave, they may not qualify for help.

They can also get help from a Housing and Urban Development (HUD) approved counseling agency.

Homeowners Can Stop Foreclosure

There are a number of ways for homeowners to stop foreclosure on their homes. One way is to apply for a stop foreclosure loan. 

This usually means a refinance loan specifically to stop the foreclosure. Refinancing the loan allows the homeowner to take out a new loan to pay off the existing mortgage, including the payments that were missed.

Reverse Mortgage

Another option to stop foreclosure is to get a reverse mortgage to pay off the existing mortgage. 

This is different from a regular mortgage because the homeowner doesn’t need to make monthly payments to the lender. The loan is given in cash payments that are based on the equity in the home.

The homeowner defers payment of the loan until they die, sell or move out of the home. This type of loan is useful for people who have enough equity in their home because it doesn’t depend on good credit qualification or income.

Whichever type of loan the homeowner selects, it is recommended that they deal with their current lender rather than finding a new one. 

There’s nothing wrong with finding a new one, but the current lender already has all the information and paperwork completed and also has a stake in getting the mortgage paid, so they may be more willing to find a solution.

Information Lenders Need

When a homeowner applies for a reverse mortgage or refinance loan to stop foreclosure, the lender will need the following information:

  1. The condition of the property
  2. The estimated value of the property
  3. The current balance on the mortgage

If the homeowner decides to go for refinancing, they will also need to give their:

  1. Credit score
  2. Income
  3. The loan to value ratio of the property

The minimum qualifications required to qualify for refinancing are a stable income, equity in the home and a good credit score. 

The interest charged for the refinancing will depend on the credit score.  Applicants will also need to show proof of income, statements of accounts on outstanding debt and a copy of their income tax returns.

There are other ways to avoid foreclosure such as loan modification. Before deciding how to stop the foreclosure of their home loan, homeowners should research several lenders, including their original lender, to see the different options offered and choose the one that gives the best deal.

When searching for a solution to foreclosure, homeowners should be aware that there are disreputable landers and scams that can cause homeowners much worse financial difficulties.

Some of the things not to do are:

  1. Sign the title of the property to another company even if they claim it is for a short time
  2. Seek counseling from a non-HUD approved organization
  3. Pay a fee for counseling or loan modification
  4. Sign papers immediately

Here’s an example of a letter requesting a stop foreclosure loan. It should be prepared in a formal business letter format and should concisely and clearly explain the homeowner’s financial condition. 

Details on what caused the financial issues should be disclosed, and the reasons should be real because they will very certainly be checked. 

The letter should be sent certified mail so that the sender has a record of when and how the loan officer got it.

Sample Stop Foreclosure Loan Request Letter

Your Name
Your Address
City, State, Zip Code

DATE

Name of Lending Institution
Name of Loan Officer
Address of Lender
City, State, Zip Code

Dear Name of Loan Officer:

As I am currently behind six months of payments on my mortgage and I desire to keep my home, I am writing this letter to request a loan so that I can stop any foreclosure action.

For the past five years, it has been easy to make my monthly mortgage payments, but I have been in financial difficulty ever since I lost my job seven months ago. 

I was not able to find employment until last week. Also, my mother suffered a heart attack, which put further strain on my income for her unexpected medical expenses.

I have a well-paying job now and have paid almost all of the medical bills, and I have every intention of paying my mortgage. 

However, I need a small loan to make it possible to repay the delinquent payments. I would appreciate your help in making it possible for me to keep my home.

Thank you for your time and attention to this matter. I would be happy to meet you and discuss further details. I am available at 555-123-4567 or at Name@email.com.

Sincerely,

Signature
Your Name

Interesting finds