application letter for foreclosure of loan

Foreclosure Letter

The best thing about EMIs is that it allows you to pay the loan amount in parts. However, if you have enough amount at the moment then you can pay a lump sum amount instead of EMI.  In other words, it is called Foreclosure. Besides, foreclosure allows you to save money on the total loan amount. And to do so, firstly you have to write a foreclosure letter to the body. Therefore, today we will see how to write a foreclosure letter.

How To Write A Foreclosure Letter?

When you write a Forclosure letter to a bank, you have to follow a designated format. In fact, the format of the Foreclosure letter is the same as for instance applying for DD cancellation. You need to write the Foreclosure letter to the branch manager. Also, make sure you state the reason for foreclosure very clear and concise.

Additionally, you have to mention the loan account number, your name, and other details.

For your reference, we have includes a few samples of writing a Foreclosure letter. Hence, refer to and use them while writing a letter to the bank.

Guidelines For Writing a Foreclosure Letter

• Address the letter to the head of the financial institution. For example, if you are writing to the bank, then address the letter to the bank manager.
• Subject must be on point.
• In the body, always mention your name and loan account number.
• If you don’t know the foreclosing procedure, then ask them to guide you.
• In case you have paid the remaining loan amount, then mention the payment details.
• This includes payment mode, amount paid, date, copy of receipt, etc.
• Additionally mention your contact number in the letter.
• finally, conclude the letter with regards or sincerely.

Format Of Writing A Foreclosure Letter

Your address

City – Pincode

Date: dd/mm/yy

The Branch Manager

Branch address

Sub: Request for ____ Loan Foreclosure

Dear Sir/Madam,

I XYZ, holding a loan account in your branch with account number 7618xxxxxx0991.

I am currently having a loan of INR xx,xxx for (state the reason). To sum up, I am writing this letter to inform you that I wish to foreclose the loan. Moreover, my loan ID is xxxxx and I opted for (no. of EMIs) EMIs. Therefore, I am willing to pay ______ (Amount)in a single installment and foreclose the loan.

Therefore, please guide me through the process of foreclosing the loan. Thank you in advance.

Yours Sincerely,

(Signature)

Contact number – 9111111111

Sample For Writing A Foreclosure Letter

Sample 1- education loan.

56, Aparna Apartment

Sharad Colony,

Pune – 118821

Date: 09/08/2022

Bank Of Baroda

Sharad Colony

Sub: Request for Education Loan Foreclosure

I Anand Talmale, having a savings account in your branch with account number 8311xxxxxx9119. To sum up, I have written this letter to forclose my remaining loan amount.

I am currently having an educational loan of INR 1,00,000 in your branch. Moreover, my loan ID is 881120 and I had converted the loan into 10 EMIs. In fact, I have already forfeited 5 EMIs.

Furthermore, I would like to pay the remaining amount in one go and foreclose the loan.

Hence, I request you to guide me through the process of foreclosing the loan.

In case you need any other information, my contact number is 9128111111. Also, I have attached a copy of my PAN card and address proof for your reference.

Anand Talmale

Contact number – 9128111111

Email id: [email protected]

Attachments:

• Address proof

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Sample 2- Home loan

If you have a joint account for home loan, you can consider this format for home loan foreclosure letter.

44/d, Indrayani appartment

Lokmat Square

Nagpur – 440014

Shivaji Nagar Branch

Nagpur – 440010

Sub: Home Loan Foreclosure Letter

We, Suman Sharma and Arpan Sharma, wife and husband respectively, have a joint account in your bank. Also, currently we are holding a home loan with the loan account number 199288777.

However, we wish to foreclose our home lone. Therefore, we are willing to pay the outstanding loan amount of INR 5 lakh at one go.

Hence, we request you to do the needful and walk us through the other procedure.

For instance, we have attached our PAN card copies, and address proof for your reference.

Yours sincerely

Suman Sharma

Contact number: 9000000000

Apran Sharma

Contact number: 91111111111

Attahced documents:

How To Obtain a Loan Foreclosure Letter From Bank?

•  Firstly, write a foreclosure letter to the bank. Also, mention and attach the loan account number, copy of PAN card, and address proof.
• Once the bank receives your letter, they will calculate the amount you still need to pay.
• The bank will inform you the amount and then you will have to make payment via NEFT, RTGS, or cheque.
• Additionally you need to pay some charges for foreclosing the loan.
• Also, you need to give a no-dues certificate along with necessary documents.

Frequently Asked Questions

Q1. What do you mean by foreclosure letter? Answer. When you repay or wish to repay the remaining outstanding loan amount in one go, then you need to write a foreclosure letter.

Q2. How long does it take to get a foreclosure letter? Answer. You may receive the foreclosure letter within 15-30 days after foreclosure. Still, you need to take follow ups from the lender. Once you receive the certificate, make sure every detail is correct.

Q3. Does foreclosure of loan affect cibil? Answer. No. if your credit score is good, then foreclosing a loan will not impact it. Additionally, it creates a good impact to future lenders about your commitment for repaying the loan.

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• Letter Writing
• Formal Letter Writing In English
• Foreclosure Letter

Foreclosure Letter | Know How to Write & Check the Samples

By making an early payment of the complete outstanding amount, any loan account holder can appeal for the premature loan to be closed. In order to apply for the closure of the premature loan account, the loan holder will have to go through a procedure, and the first step is to write a foreclosure letter to the bank. To know the loan foreclosure request letter format, read the article till the end.

Table of Contents

How to write a loan foreclosure letter to the bank, foreclosure letter format and samples, home loan foreclosure letter, home loan foreclosure letter for joint account, frequently asked questions on foreclosure letter.

Writing a letter to the bank for any purpose follows a specific format. Even if you are applying for a bank statement or writing a loan foreclosure letter, you need to follow the format for the same. For the purpose of closing your loan account permanently, you will have to write a loan foreclosure letter to the branch manager stating the reason behind the closure. Do not forget to mention your account details, name, loan account number, etc.

Because of the procedures, some people find it difficult to write a bank application. We have included some samples of foreclosure letters, as well as some examples of house loan foreclosure letter formats, to make things easier. To learn more, continue reading.

The loan foreclosure request letter format is pretty simple if you have all the details with you. The person applying for the closure of the loan account will have to state the reason behind the closure and follow the format for writing the letter.

If a person is willing to close the premature home loan account, then they will have to follow the home loan foreclosure letter format and write a letter to the bank. We have provided a few samples of loan foreclosure letters for a better understanding of the format. In order to write a foreclosure letter for a home loan, refer to the below samples.

In case a person wants to write a home loan foreclosure letter to the bank, they can refer to the below-provided sample.

#57 Saheed Nagar

Bhubaneswar, 751007

The Branch Manager

State Bank of India

#44, Bandra Branch

Bhubaneswar – 751007

Sub: Request for home loan foreclosure

Dear Madam,

I am Nisha Mittal, and I currently have a home loan against my account number (mention your account number). I want to foreclose my home loan this month by paying the outstanding amount in a single payment.

I have paid 8 EMIs as of now, and there are 5 EMIs pending until this year.

I request you to please inform me about the home loan foreclosure procedure at your bank as well as the remaining loan balance that I must pay in order to foreclose my home loan.

Sharing my contact information in case you require any more information.

Mobile number: 123456

E-mail address: [email protected]

Waiting for your response.

Yours sincerely,

Nisha Mittal

If there is a joint account for a home loan and they want to write an application to close the loan account, they can follow the below-mentioned home loan foreclosure letter format.

From Address

Name of the Bank

Sub: Home loan foreclosure request letter

Dear Sir/Madam,

With utmost respect we, _____ and ____ husband/father/mother and wife/daughter (any relationship) respectively run a combined home loan account in your bank under the loan account number _____________.

We now want to foreclose on our home loan, and we paid the outstanding loan amount of Rs.___ via check with number ____ dated ___.

We are aware of the charges applicable on the foreclosure of loan accounts as a part of your policy.

We request you to kindly do the needful to close the above-said home loan account and provide us with the relevant documents.

Thanking you.

Borrower name & signature

Co-borrower name & signature

What is meant by a foreclosure letter?

When a borrower repays the entire outstanding loan amount in one payment rather than in EMIs, they need to write a letter for the foreclosure of the loan, which is known as the foreclosure letter.

Are there any foreclosure charges deductions?

Yes, there will be foreclosure charges which will be deducted as a part of the bank’s policy.

What are the advantages of a loan foreclosure?

Prepaying your current personal loan in full or foreclosing it is deemed favourable and can help you raise your CIBIL score. An enhanced credit score can help you conclude your next loan application faster and negotiate better terms with the lender.

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16+ Foreclosure Letter Format – How to Write & Check Samples

• Letter Format
• January 23, 2024
• Contract Letters , Agreement Letters , Legal Letters , Marketing Letters

Foreclosure Letter Format: Foreclosure is the legal process through which a lender can seize a property when a borrower fails to meet their loan obligations . marketing letters are the first step in this process, and they notify the borrower that they are in default and that the foreclosure process is about to begin.

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Format of Foreclosure Letter

Content in this article

The Legal letter format may vary depending on the jurisdiction, but typically it includes the following information:

• The borrower’s name and address
• The lender’s name and address
• The loan number and amount
• The date of default
• A description of the property to be foreclosed
• A statement indicating that the borrower is in default and the reasons why
• A statement indicating the lender’s intention to foreclose on the property
• A statement indicating the borrower’s right to cure the default and the timeframe in which they must do so
• Contact information for the lender and instructions on how to respond

The Foreclosure Letter Format is usually sent via certified mail or delivered in person to the borrower’s last known address. It is important that the Foreclosure Letter Format is written clearly and concisely, and that it follows the guidelines set out by the jurisdiction.

In addition to the standard format, the foreclosure letter may also include additional information or attachments, such as:

• A copy of the loan agreement or promissory note
• A statement of the borrower’s account history and payment records
• A notice of the borrower’s right to request a meeting with the lender or their representative.
• A notice of the borrower’s right to seek legal counsel and representation.
• A statement of the lender’s intention to auction the property or sell it to a third party.

Foreclosure Letter Format can be emotionally charged and stressful for both the borrower and the lender. Foreclosure Letter Format is important to approach the situation with empathy and professionalism, and to provide the borrower with all the information they need to understand their options and rights .

Foreclosure Letter Format – Sample Format

Here’s a sample format for a Foreclosure Letter:

[Your Name] [Your Address] [City, State, ZIP Code] [Email Address] [Phone Number] [Date]

[Recipient’s Name] [Recipient’s Address] [City, State, ZIP Code]

Subject: Notice of Foreclosure

Dear [Recipient’s Name],

I hope this letter finds you well. This letter serves as formal notice of the foreclosure of the property located at [Property Address], which is secured by the mortgage dated [Mortgage Date], recorded in the office of [County Recorder’s Office] in Book [Book Number], Page [Page Number].

Due to non-payment of the outstanding mortgage amount, we regret to inform you that the lender has initiated foreclosure proceedings on the aforementioned property. The total outstanding balance as of [Current Date] is [Outstanding Amount].

Please be advised that you have [number of days] from the date of this notice to settle the outstanding balance to avoid the completion of the foreclosure process. If payment is not received by [Deadline Date], the lender will proceed with the legal actions necessary to complete the foreclosure.

For payment instructions or to discuss potential alternatives, please contact our office at [Lender’s Contact Information]. It is our sincere hope to find a resolution to this matter and avoid any further legal proceedings.

We understand the challenges that may lead to financial difficulties, and we are willing to work with you to explore potential solutions. However, prompt action is required to prevent the completion of the foreclosure process.

Thank you for your attention to this matter. We encourage you to seek legal advice to understand your rights and responsibilities in this situation.

[Your Full Name] [Your Title, if applicable] [Lender’s Company Name] [Lender’s Contact Information]

Foreclosure Letter Format – Example

Here’s an example of a Foreclosure Letter:

Subject: NOTICE OF FORECLOSURE

I trust this letter finds you. I am writing to inform you about the initiation of foreclosure proceedings on the property located at [Property Address]. This action is being taken due to non-payment of the mortgage secured by the property.

As of [Current Date], the outstanding balance on your mortgage is [Outstanding Amount]. Despite multiple attempts to contact you regarding the overdue payments, we have not received any response or payment.

Please be aware that you are now in default under the terms of your mortgage, and as a result, foreclosure proceedings have begun. You have [number of days] from the date of this notice to settle the outstanding balance and bring the mortgage current.

To avoid further legal actions and the completion of the foreclosure process, it is imperative that you contact us at [Lender’s Contact Information] immediately to discuss your options for resolving this matter. This may include payment arrangements, loan modification, or other alternatives.

If we do not receive payment or a viable plan for resolution by [Deadline Date], we will proceed with the necessary legal actions to complete the foreclosure. We understand that financial difficulties may arise, and we are willing to work with you to find a solution.

Please treat this matter with urgency, and do not hesitate to reach out to us to discuss your situation. Seeking legal advice is also recommended to fully understand your rights and responsibilities in this matter.

Thank you for your immediate attention to this serious matter.

Formal Foreclosure Letter Format

This is a Formal Foreclosure Letter Format

[Your Name] [Your Address] [City, State ZIP Code] [Date]

[Recipient’s Name] [Recipient’s Address] [City, State ZIP Code]

Dear [Recipient’s Name],

This letter serves as a formal notice of foreclosure on the property located at [Property Address]. As the lender on this property, we regret to inform you that the borrower has defaulted on the loan and is in breach of the loan agreement.

We have made numerous attempts to work out a repayment plan with the borrower, but unfortunately, all efforts have been unsuccessful. Therefore, we have no other option but to initiate foreclosure proceedings.

We understand that this may be a difficult time for you, and we are committed to working with you to resolve this matter as efficiently and amicably as possible. We urge you to contact us immediately to discuss the options available to you.

We would appreciate your cooperation in this matter, and we look forward to hearing from you soon.

[Your Name]

Informal Foreclosure Letter Format

Here’s an Informal Foreclosure Letter Format

I regret to inform you that foreclosure proceedings have been initiated on the property located at [Property Address]. The borrower has defaulted on the loan, and despite numerous attempts to work out a repayment plan, all efforts have been unsuccessful.

As a result, we have no other option but to proceed with foreclosure. We understand that this may be a difficult time for you, and we are committed to working with you to resolve this matter as efficiently and amicably as possible.

Please contact us as soon as possible to discuss the options available to you. We would appreciate your cooperation in this matter, and we look forward to hearing from you soon.

Foreclosure Letter Format – Template

Here’s a template for a Foreclosure Letter format:

I hope this letter finds you. I am writing to inform you that foreclosure proceedings have been initiated on the property located at [Property Address]. This action is a result of non-payment of the mortgage secured by the property.

As of [Current Date], the outstanding balance on your mortgage is [Outstanding Amount]. Despite our previous attempts to contact you regarding the overdue payments, we have not received any response or payment.

You are now in default under the terms of your mortgage, and foreclosure proceedings have commenced. You have [number of days] from the date of this notice to settle the outstanding balance and bring the mortgage current.

To prevent further legal actions and the completion of the foreclosure process, it is crucial that you contact us at [Lender’s Contact Information] immediately. We are open to discussing options for resolution, which may include payment arrangements, loan modification, or other alternatives.

Foreclosure letter format for real estate

Here’s a foreclosure letter for real estate:

[Your Name] [Your Title, if applicable] [Your Company Name, if applicable] [Your Address] [City, State, ZIP Code] [Email Address] [Phone Number] [Date]

I trust this letter finds you well. I am writing to formally notify you that foreclosure proceedings have been initiated on the real estate property located at [Property Address]. This action is a result of non-payment of the mortgage secured by the property.

As of [Current Date], the outstanding balance on your mortgage is [Outstanding Amount]. Despite our previous attempts to communicate with you regarding the overdue payments, we have not received any response or payment.

You are currently in default under the terms of your mortgage, and as a consequence, foreclosure proceedings have commenced. You have [number of days] from the date of this notice to settle the outstanding balance and bring the mortgage current.

To avoid further legal actions and the completion of the foreclosure process, it is imperative that you contact us at [Lender’s Contact Information] immediately. We are open to discussing options for resolution, which may include payment arrangements, loan modification, or other alternatives.

[Your Full Name] [Your Title, if applicable] [Lender’s Company Name, if applicable] [Lender’s Contact Information]

Foreclosure Letter Format for Real Estate

Foreclosure Letter Format to delinquent borrower

Here’s a Foreclosure Letter Format addressed to a delinquent borrower:

I hope this letter finds you. Unfortunately, I am writing to inform you that due to non-payment of the mortgage secured by your property, foreclosure proceedings have been initiated on the real estate located at [Property Address].

As of [Current Date], the outstanding balance on your mortgage is [Outstanding Amount]. Despite our multiple attempts to contact you regarding the overdue payments, there has been no response or payment received.

You are now in default under the terms of your mortgage, leading to the commencement of foreclosure proceedings. You have [number of days] from the date of this notice to settle the outstanding balance and bring the mortgage current.

To prevent further legal actions and the completion of the foreclosure process, it is crucial that you contact us at [Lender’s Contact Information] immediately. We are open to discussing options for resolution, such as payment arrangements, loan modification, or other alternatives.

If payment or a viable plan for resolution is not received by [Deadline Date], we will proceed with the necessary legal actions to complete the foreclosure. We understand that financial difficulties may arise, and we are willing to work with you to find a solution.

Foreclosure Letter Format to Delinquent Borrower

Foreclosure letter to property owner

Here’s a foreclosure letter addressed to a property owner:

[Property Owner’s Name] [Property Owner’s Address] [City, State, ZIP Code]

Dear [Property Owner’s Name],

I hope this letter reaches you in good health. Unfortunately, I am writing to inform you that foreclosure proceedings have been initiated on the real estate property located at [Property Address] due to non-payment of the mortgage secured by the property.

As of [Current Date], the outstanding balance on your mortgage is [Outstanding Amount]. Despite our numerous attempts to reach you regarding the overdue payments, there has been no response or payment received.

You are currently in default under the terms of your mortgage, resulting in the commencement of foreclosure proceedings. You have [number of days] from the date of this notice to settle the outstanding balance and bring the mortgage current.

To avoid further legal actions and the completion of the foreclosure process, it is crucial that you contact us at [Lender’s Contact Information] immediately. We are open to discussing options for resolution, including payment arrangements, loan modification, or other alternatives.

Foreclosure Letter to Property Owner

Email Format about Foreclosure Letter Format

Here’s an Email format of Foreclosure Letter Format:

Subject: Notice of Foreclosure on [Property Address]

I am writing to inform you that we have initiated foreclosure proceedings on the property located at [Property Address]. As the lender on this property, we regret to inform you that the borrower has defaulted on the loan and is in breach of the loan agreement.

Please note that failure to respond to this notice may result in legal action being taken against you. Therefore, we urge you to take this matter seriously and contact us as soon as possible.

[Your Title]

[Your Contact Information]

foreclosure letter to mortgage company

Here’s a foreclosure letter addressed to a mortgage company:

[Mortgage Company’s Name] [Mortgage Company’s Address] [City, State, ZIP Code]

Dear [Mortgage Company’s Name],

I trust this letter finds you well. Unfortunately, I am writing to formally notify you that foreclosure proceedings have been initiated on the real estate property located at [Property Address]. This action is a result of non-payment of the mortgage secured by the property.

As of [Current Date], the outstanding balance on the mortgage is [Outstanding Amount]. Despite our previous communications regarding the overdue payments, there has been no response or payment received.

The borrower, [Borrower’s Name], is currently in default under the terms of the mortgage, leading to the commencement of foreclosure proceedings. They have [number of days] from the date of this notice to settle the outstanding balance and bring the mortgage current.

To prevent further legal actions and the completion of the foreclosure process, it is imperative that you contact us at [Lender’s Contact Information] immediately. We are open to discussing options for resolution, including payment arrangements, loan modification, or other alternatives.

Please treat this matter with urgency, and do not hesitate to reach out to us to discuss the situation. Seeking legal advice is also recommended to fully understand your rights and responsibilities in this matter.

Foreclosure Letter to Mortgage Company

Foreclosure letter draft

Here’s a draft of a foreclosure letter:

I hope this letter finds you. It is with regret that I write to inform you that foreclosure proceedings have been initiated on the real estate property located at [Property Address]. This action is a consequence of non-payment of the mortgage secured by the property.

As of [Current Date], the outstanding balance on your mortgage is [Outstanding Amount]. Despite our numerous attempts to communicate with you regarding the overdue payments, there has been no response or payment received.

Foreclosure Letter Draft

FAQS About Foreclosure Letter Format – How to Write & Check Samples

What should be included in a foreclosure letter format.

A Foreclosure Letter Format should include details such as the borrower’s name, property address, outstanding balance, the reason for foreclosure, a deadline for resolution, and contact information for the lender.

How do I write a Foreclosure Letter Format to a homeowner?

This Foreclosure Letter Format Start with a clear subject line, mention the outstanding balance, specify the reason for foreclosure, provide a deadline for resolution, and include contact information for further discussion.

Are there specific legal requirements for a Foreclosure Letter Format?

Legal requirements for Foreclosure Letter Format may vary by jurisdiction. It’s advisable to consult legal experts or follow local regulations to ensure compliance.

Can a Foreclosure Letter Format be used as a negotiation tool?

Yes, a Foreclosure Letter Format can serve as a starting point for negotiations. Lenders may be open to discussing alternatives such as payment plans or loan modifications.

What is the importance of a Foreclosure Letter Format in the foreclosure process?

A Foreclosure Letter Format is a formal notice that informs the borrower about the initiation of foreclosure proceedings. It outlines the steps they can take to avoid foreclosure and serves as a legal requirement in many jurisdictions.

Can a Foreclosure Letter Format be customized based on the borrower’s situation?

Yes, a Foreclosure Letter Format can be customized to address specific details of the borrower’s situation, outstanding balance, and potential resolutions.

Is it necessary to include a deadline in a Foreclosure Letter Format?

Including a deadline in a Foreclosure Letter Format is crucial. It provides the borrower with a specific timeframe to address the outstanding balance and prevent further legal actions.

The foreclosure letter format is an important part of the foreclosure process. It should be clear, concise, and include all the necessary information for the borrower to understand the situation and take action. By following the guidelines of Foreclosure Letter Format set out by the jurisdiction and approaching the situation with empathy and professionalism, lenders can ensure that the foreclosure process is carried out in a fair and transparent manner .

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Sample Letter to Bank for Prepayment or Foreclosure of Loan

If you are considering prepaying or foreclosing your loan, you will need to write a bank for prepayment or foreclosure of loan letter. This letter is necessary because it gives the bank notice of your intentions and allows them to object to the prepayment or foreclosure.

When writing a bank for prepayment or foreclosure of loan letter, there are a few things that you should keep in mind:

• You will need to include your contact information and account number.
• You must state your intent to prepaid or foreclose on the loan.
• You will need to provide a reason for your decision.

Similar Post: Loan Cancellation Letter

Loan Foreclosure Letter: What You Need to Know and How to Write One

Receiving a loan foreclosure letter can be overwhelming and stressful for a borrower. A loan foreclosure letter is a legal document sent by a lender to a borrower to notify them that their loan is in default and that foreclosure proceedings will begin if the borrower does not take appropriate action to bring their account current. This article will discuss everything you need to know about loan foreclosure letters, including what they are, why they are essential, and how to write one.

What is a Loan Foreclosure Letter?

A loan foreclosure letter is a document a lender sends to a borrower when the borrower has defaulted on their loan payments. The letter will typically outline the terms of the loan, the amount of the payments that have been missed, and the amount of money that is required to bring the loan current. The letter will also inform the borrower that foreclosure proceedings will begin if they do not take appropriate action.

Why is a Loan Foreclosure Letter Important?

A loan foreclosure letter is essential for both lenders and borrowers. For lenders, the letter is a necessary legal document that informs the borrower of the consequences of defaulting on their loan payments. For borrowers, the letter serves as a warning that foreclosure proceedings will begin if they do not take appropriate action to bring their account current.

How to Write a Loan Foreclosure Letter

If you are a lender and need to write a loan foreclosure letter, there are specific steps to ensure that your letter is clear, concise, and practical. Here are the steps you should take when writing a loan foreclosure letter:

Step 1: Identify the Borrower

The first step in writing a loan foreclosure letter is identifying the borrower. You should include the borrower’s name, address, and any other necessary identifying information to ensure that the letter is delivered to the correct person.

Step 2: Explain the Situation

Once you have identified the borrower, the next step is to explain the situation. You should outline the terms of the loan, the amount of the payments that have been missed, and the amount of money that is required to bring the loan current. Be sure to include any relevant dates, such as the date of the first missed payment and the date of the most recent payment.

Step 3: Inform the Borrower of Consequences

In your loan foreclosure letter, you should inform the borrower of the consequences of defaulting on their loan payments. Let them know that foreclosure proceedings will begin if they do not take appropriate action.

Step 4: Provide Options

It is essential to provide the borrower with options for bringing their account current. This could include payment plans or other arrangements allowing the borrower to catch up on their payments.

Step 5: Explain the Foreclosure Process

In your loan foreclosure letter, you should also explain the foreclosure process. Let the borrower know what will happen if they do not take appropriate action and how long they must respond to the letter.

Step 6: Provide Contact Information

Finally, be sure to provide the borrower with contact information for your organization. This will allow them to contact you with any questions or concerns.

Similar Post: Home Loan Interest Certificate Request Letter Format

Date : ________

(Name of the Borrower)

Mob. _________

Email: ___________

The Branch Manager

(Name of the Bank)

(Name of the Branch)

(Bank Address)

Sub.: Request for prepayment / pre-closure of loan obtained

Ref: Loan account number ___________

Dear Sir/Madam,

I am writing this letter to inform you that I would like to request for prepayment / pre-closure of my loan amounting to $____________ (loan amount). I have been a good-paying customer of the bank, and I can fully settle my loan earlier than the maturity date.

The loan’s prepayment / pre-closure will enable me to save on interest payments. I am attaching all the necessary documents for your perusal. I hope that you will approve my request at the soonest possible time. Thank you very much.

I confirm that the prepayment/ pre-closure payment is being made from the sources mentioned herewith. Please note the following details of payment enclosed towards prepayment / pre-closure of the said loan:

1. Cheque/ DD/ Ref. No. ________ dated _________.

2. Amount: __________.

3. Bank name and Branch: _____________.

4. Bank account number: ___________.

5. Payer name: _______________________.

6. Source Description with Source Amount Breakup.

7. Details of Bank Statement/ Other Document evidencing source: ___________.

The bank statement for the last six months is enclosed herewith for your kind information.

(Write this para only for pre-closure.) Further, if any excess amount is available under my loan account after adjusting all the dues and charges, then you are kindly requested to remit such amount directly to my following bank account: (a) Bank name: _____________, (b) Account number: __________, (c) Type: Savings/Current, (d) IFSC: __________, (e) MICR: _________, and (f) Account-holder name: __________.

Kindly do the needful and oblige.

Thanking you,

Yours faithfully,

   (Signature)

In conclusion, a loan foreclosure letter is a legal document that notifies a borrower that they have defaulted on their loan and the lender is starting the foreclosure process. It is a serious matter and should be handled promptly and professionally. In order to avoid foreclosure, it is important for borrowers to communicate with their lenders and explore alternative options such as loan modifications, refinancing, or selling the property.

If you receive a loan foreclosure letter, it is important to seek legal advice and take appropriate actions to protect your interests. While it can be a daunting and stressful experience, there are resources available to help borrowers navigate through the foreclosure process.

In terms of SEO, creating high-quality content that provides value to readers and incorporates relevant keywords and subheadings is key to outranking other websites. By providing comprehensive information on loan foreclosure letters, we hope to not only improve our search engine rankings but also assist readers in understanding the foreclosure process and how to take appropriate actions.

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Home » Letters » Bank Letters » Personal Loan Foreclosure Request Letter – Request Letter Format for Foreclosure of Personal Loan

Personal Loan Foreclosure Request Letter – Request Letter Format for Foreclosure of Personal Loan

Table of Contents:

• Sample Letter

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How to use live assistant, additional template options, download options, share via email, share via whatsapp, copy to clipboard, print letter, request letter format for foreclosure of personal loan.

To, The Bank Manager, __________ (Bank Name), __________ (Branch Address)

Date: __/__/____ (Date),

Subject: Foreclosure of personal loan

Respected Sir/Madam,

With due respect, I ________ (your name) and I do hold a personal loan account in your branch bearing account number ___________ (account number).

I am writing this letter to request you the foreclosure of the above-said personal loan. My loan account number is ________ (Loan ID/Account Number) for the duration ______ (tenor). I have already paid ______ (Amount) in _______ (Number of EMIs paid) EMI’s. I am ready to pay all pending amounts i.e. ________ (Pending loan amount).

I request you to kindly guide me through the procedure to avail of the above-mentioned service. I shall be highly obliged for your kind response. In case of any queries, you may contact me at __________ (contact number).

Thanking you, _________ (Signature) _________ (Your name), _________ (Contact number)

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• Include your name, personal loan account details, the amount paid, remaining balance, and a polite request for guidance on the foreclosure procedure.
• Mentioning the number of EMIs paid helps the bank assess the status of your loan repayment.
• You can express gratitude by thanking the bank for their assistance and cooperation in facilitating the foreclosure process.
• Yes, providing contact information ensures that the bank can reach you for further communication or clarification regarding the foreclosure request.
• If you have any inquiries about the foreclosure process, you can contact the bank directly at the provided contact number for further assistance.

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Application Letter

• Leave Application
• School & College Letter
• Office Application
• Bank Application
• Other Application

Loan Closure Letter Format & Sample In Word, Pdf

Loan Closure Letter Format:  Are you searching for some of the Best Loan Closure Letter Format Sample In Word & Pdf? If Yes, then here you will get these types of application letter sample.

Let me tell you first, To close an account with the bank from which you took your loan, follow & read their terms and conditions very carefully.

Then write the account closure request letter using the application samples given below. Submit with it some documents (e.g. Personal Loan account number, approval letter, other documents issued by the bank) and Identity proof (e.g. Passport, PAN card, Aadhar).

If the bank has any pre-closure amount, then they have to pay it. Then in a few days, the bank will send you the loan completion document. After that all the process of closing your loan account will be completed.

The letter samples given below can be used for any bank without any problem. For example, you can use them in the case of HDFC personal loan closure letter format or SBI home loan closure letter format.

Personal Loan Closure Letter Format

To, The Branch Manager (Bank Name), (Bank Address), (Date).

Subject: Request Letter For Loan Closure.

Dear Sir/Madam,

I, ___________(Write Your Name) have a personal loan in my account on your _______ (Mention Your Bank Name) bank. I am writing this application letter to request you to close my personal loan account bearing account number ____________ (Mention Your Loan Account Number). The reason for closure is ___________ (Mention the reason for the closure correctly here).

I would like to inform you that I have paid all the EMI, loans. You can check your records. As per the requirements of the bank, I am attaching the applicable documents with this application.

Kindly consider this request letter and do the needful as soon as possible.

Thanking you,

Yours Faithfully, (Your Legal Name), (Your Address), (Your Email), (Your Mobile).

Car Loan Closure Letter Format

To, The Bank Manager (Name of the Bank ), (Branch Address), (Date).

Subject: Closure of the car loan account.

Respected Sir/Madam,

I am writing this letter to state that, I am holding an auto/vehicle/car loan bank account in your ________ (Mention Your Bank Branch Name) branch.

All details of my account are listed below: Loan Account Holder Name:- Loan Account Number:- Loan Approved Amount:- My PAN Number:-

Currently, I am willing to pay all my remaining amount and at the same time, I want to close my loan account.

So I request you, please let me know the detailed process and necessary documents for it. So that I can pay the remaining amount quickly and close the account.

Thank you in advance.

Yours Truly, (Your Name), (Full Address), (Your Contact Details).

Home Loan Closure Letter Sample

To, The Branch Manager, (Bank Name), (Branch Name), (Branch Address), (Date).

Subject: Application for home loan.

With due respect, I Beg to say that I hold a loan account & account no is ___________ [Mention Your Bank Account No] with your __________ [Mention Your Branch Name] branch. For some personal reason, I want to close my home loan account. (You can specify the reason for this closure)

Therefore, you are requested to kindly close my account. I will always be grateful to you. If any other information or documents is required for it, kindly contact me on my mobile number. my mobile number is ____________ (Mention Your mobile Number).

Thanking You.

Yours Sincerely, (Your Name), (Address), (Your Account Details), (Contact Details).

Loan Closure Letter HDFC, SBI & ICICI

To The Bank/Branch Manager, [Bank Name], [Bank Address], [Date:__/__/__].

Subject: Personal/Home/Car loan closure application letter.

With due respect, I ______ [Your name], I am writing this letter to request that I want to close my personal/home/car loan associated with loan account no _______ [Mention your loan account no].

Now, that I am already paid my total due & I request you to please go through the process of pre-closing my loan.

If you need any additional information or documents to complete this process, you can let me know at the phone number below.

Yours Sincerely, [Your Name], [Phone Number], [E-mail Address].

Read Also: Application For Closing Bank Account Letter

Application For Closing Loan Account

To The Branch Manager, [Name of the Bank], [Branch Address],

Date: Day/Month/Year.

Subject: Loan account close application.

Most respectfully I beg to state that, I ______ [Your name], I am a saving account holder in your branch. Also, I have a loan account & my loan account number is ________ [Mention your account no]. I want to close my loan account for some personal reasons.

Therefore, I request you to close my loan account and provide me with all the original documents that I submitted when applying for the loan account.

We hope you’ll consider my request properly and begin the process of closing the account as soon as possible.

Yours Sincerely, [Signature], [Contact Details], [Address].

Loan Closure Letter Format Sample In Word & PDF

👉 [Download In Word / PNG / PDF ] 👈

FAQ’s On Loan Closure Letter Format Sample

How do you close a loan account? You can easily close your loan account by following the steps given below –

• Visit the bank with all required documents.
• Write a loan closure letter to the bank manager OR, You may be required to fill a form.
• If there is a pre-closing amount, then pay it.
• Return your credit card. (If issue)
• Take acknowledgment paper from your bank.
• Then your loan account will be closed automatically in a few days.

Which bank is best for personal loan? Below we have mentioned the names of some of the best banks in India for taking loans –

• State Bank of India (SBI): Interest Rate- 9.60% onwards , Loan Amount- Up to Rs. 20 lakh .
• ICICI Bank:  Interest Rate- 11.25% onwards , Loan Amount- Up to Rs. 20 lakh .
• HDFC Bank: Interest Rate- 10.75% onwards , Loan Amount- Up to Rs. 40 lakh .
• Bajaj Finserv:  Interest Rate- 12.99% onwards , Loan Amount- Up to Rs. 25 lakh .
• Axis Bank: Interest Rate- 12% onwards , Loan Amount- Up to Rs. 15 lakh .

Can we close HDFC loan online? Unfortunately, you cannot close our HDFC Bank loan online, for this, you need to visit your nearest HDFC Bank and close the loan account. Also, you need to pay a certain amount to pre-close your loan.

Is there any pre-closure charges for home loan in SBI? No, you don’t have to pay any penalty for pre-closing your SBI home loan on fixed and floating rate interest. However, you may have to go to any branch of SBI and fill up some forms for it.

Online receipt makers can help you create professional receipts for loan closings. These tools let you customize the template, add your logo, and track receipts. Using a Zintego online receipt maker can help you create a clear and concise receipt that meets all of the necessary requirements.

Read Also:-

• Banking Related Cyber Crime Complaint Letter
• Application For Degree Certificate
• Kannada Letter Writing Format & Samples

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Foreclosure Loan Application Letter

May 20, 2050

Gianna Fitzgerald

Credit Manager

Auto Gear Finance

404 Oak Lane

Rivertown, TX 85005

Dear Ms. Fitzgerald,

I am writing to request assistance and a consequent application for a Foreclosure Loan. Over the past few months, my financial predicament has been bleak, leading me to the precipice of foreclosure. This loan could help remediate this situation by allowing ample time to rectify my financial affairs.

I am humbly seeking your leniency and understanding in this matter. I am fully committed and prepared to adhere to the payment plan we will work out. I am sure that with your assistance, I can overcome this testing phase. Your aid in this circumstance benefits me and ensures that the loaning company doesn't confront a loss from foreclosure.

Looking forward to a favorable response, we can arrange a meeting at your earliest convenience to discuss this and provide all necessary documentation. I appreciate your time and consideration in this matter.

Scarlett Lee

Free Loan Application Letter Templates @ Template.net

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What is a foreclosure? How it works and how to avoid it

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The Bankrate promise

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money .

Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.

Bankrate follows a strict editorial policy , so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts , who ensure everything we publish is objective, accurate and trustworthy.

Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner.

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Bankrate follows a strict editorial policy , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.

Key Principles

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Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.

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We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.

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Key takeaways

• A foreclosure occurs when a lender takes control over a property from a borrower for failing to make timely payments.
• A foreclosure can damage your credit score and result in loss of property.
• As soon as you realize you can't pay your mortgage, reach out to your lender or servicer to learn about the mortgage relief options available to you.

When you take out a mortgage, you agree to give your lender the right to foreclosure, meaning that they can take possession of your home if you don’t repay your loan. If you fall behind on several mortgage payments, your lender may begin the foreclosure process. This process can be lengthy, leading to months or years of financial and emotional stress. If unaddressed, foreclosure can lead to losing your home.

What is a foreclosure?

Foreclosure happens when the lender takes control of a property after the borrower misses multiple mortgage payments . This is also referred to as defaulting on the loan. In doing so, the borrower is breaking the mortgage contract they signed with their lender.

The borrower will receive a Notice of Default, which means the lender will start the foreclosure process. This process can take up to several years and can result in the borrower being evicted.

Types of foreclosure

The types of foreclosures that can occur depend on the state you live in and your mortgage terms. Some foreclosures involve legal action (judicial foreclosures), and others do not (non-judicial foreclosures). The types of foreclosures include:

• Judicial foreclosure: With a judicial foreclosure, the lender files a lawsuit and the borrower is notified of the non-payment. The homeowner has 30 days to make up the missed payments, otherwise the foreclosure process will proceed. Judicial foreclosure is a standard procedure nationwide, but certain states (listed below) only allow this approach and don’t permit other types of foreclosures.
• Power of sale: A power of sale foreclosure is allowed in some states if your mortgage has a power of sale clause in the contract. Once you fall behind on your payments, your mortgage provider is allowed to put the house up for auction. A power of sale foreclosure is considered a non-judicial foreclosure because no legal action is taken.
• Strict foreclosure: Strict foreclosures are less common because only a few states allow them. In this case, the mortgage lender files a lawsuit against the homeowner, and if the homeowner does not make up their payments within the court-ordered period, the lender can seize the home.

Judicial foreclosure states

The states that only allow judicial foreclosures include:

• Connecticut
• North Dakota
• Pennsylvania
• South Carolina

Non-judicial foreclosure states

States that allow both types of foreclosure—judicial and non-judicial—include:

• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• Rhode Island
• South Dakota
• West Virginia

Foreclosure process: How does foreclosure work?

Each state has its own laws pertaining to the foreclosure process and foreclosure sales. These laws can govern your mortgage relief options if you are already in foreclosure, how to post a Notice of Sale, the sale timeline and other parts of the process.

Step 1: Missed mortgage payments

If your mortgage payment is a few days late, you are probably not at risk of foreclosure. Your lender may have a grace period of up to two weeks for you to make your payment without serious penalties. After the grace period, however, your payment is considered late and your lender will charge late fees. You might also receive a warning from your lender about a potential foreclosure if you fail to make the payments.

Step 2: Notice of Default

After three to six months of missed mortgage payments, your lender will file a Notice of Default with the local recorder’s office. Your lender will also send one to you via certified mail, and depending on your state, might post the notice on your front door. This notice specifies how much you owe to bring your mortgage back into good standing.

A Notice of Default could show up on your credit report and affect your score. This can make it more challenging to get other types of credit or refinance your mortgage .

Once you’ve received a Notice of Default, you need to act swiftly to avoid foreclosure proceedings . “Do not let this sit,” says Andy Manthei, a business development specialist with GreenPath, a non-profit that specializes in financial and housing counseling. “Don’t stick your head in the sand.”

At this point in the process, you have more options and should contact your lender and a housing counselor. You can use the U.S. Department of Housing and Urban Development’s lookup tool to find a housing counselor in your state.

Step 3: Preforeclosure

Preforeclosure is the time between the Notice of Default and the auction or sale of your home. During this time, if you can pay the amount specified in the Notice of Default, you can stop the foreclosure process. The exact amount of time you have depends on your state. During preforeclosure, you might also have the option to sell your home and pay back the money owed — a process called a short sale .

Step 4: Notice of Sale

If you don’t have the money to bring your mortgage into good standing within the allotted time frame, your lender will file a Notice of Sale. Then, your home will be placed up for auction at a specified time and place.

How the Notice of Sale is published depends on your state. For example, in North Carolina , the notice must be published in a local newspaper and posted on the door of the local courthouse. In California , it must be posted on the property, as well as a public place in the county.

Because the Notice of Sale is public information and has been advertised, several buyers, including investors, might be interested in buying your home. Depending on laws in your state, you might have the ability to exercise the right of redemption (meaning you can reclaim your home) up until the foreclosure sale, or even after.

Step 5: Eviction

Following the auction and sale of your home, you’ll generally have a few days to gather your belongings and move to a new residence. If you do not voluntarily move out, law enforcement personnel are legally allowed to remove you and your belongings from the premises.

What are the consequences of foreclosure?

Getting a mortgage after foreclosure can be challenging because of the impact on your credit score and the fact that you’ll likely need to endure a waiting period before applying for a new loan. Other consequences of foreclosure include:

• Losing your home: You’ll need to find a new place to live with a foreclosure on your record. This won’t just have a financial impact but an emotional one as well.
• Damage to your credit: A foreclosure stays on your credit report for seven years.
• Losing your property and equity: Not only will you lose your place to live, but you’ll also lose the money and effort you put into it. This can have far-reaching impacts on your overall wealth.
• Owing money: Depending on your state’s laws, you may owe money if your home sells at the foreclosure auction for less than you owe. The amount owed is called a “deficiency.” If you can’t pay, you may be sued, face wage garnishment and more.

How to avoid foreclosure

Ultimately, avoiding foreclosure starts by communicating with your mortgage lender or servicer. It is unlikely that your lender will let you off the hook completely, but it can help you take action so you do not lose your home.

“Know you’re not alone,” says Manthei. Foreclosure can be a scary experience, but there are steps you can take to get help, he explains.

Some of the best ways to avoid a home foreclosure include:

• Contact a housing counselor: According to Manthei, a housing counselor will connect you with resources and prepare you for using them. “As certified counselors, we walk homeowners through every single option available based on their situation,” he says. You can contact a local HUD housing counselor or dial the HOPE hotline at (888) 995-HOPE to connect with a housing expert for 24/7 help.
• Take advantage of forbearance programs: You may be able to apply for forbearance if you have a federally-backed loan from Fannie Mae or Freddie Mac.
• Adjust your loan terms : If you are struggling to afford your monthly loan payment, ask your lender if they can modify your loan terms. In exchange for a longer amortization schedule, you might be able to lower your monthly payment.
• Get a   deed-in-lieu of foreclosure : Some states allow homeowners to choose a deed-in-lieu of foreclosure, in which you agree to turn over your home to your lender to avoid foreclosure. With this option, you don’t need to pay your mortgage, but you might still be responsible for paying the difference between your home’s value and the mortgage balance.
• Set up a repayment plan: If you know that you are unable to make your mortgage payment for a given month, let your lender know as soon as possible. Your lender might set up a payment plan that involves more frequent but lower payments or deferral for a month or two.

Foreclosure FAQ

How long does foreclosure take, what should i do if i receive a notice of default, where can i find help for a foreclosure proceeding, what happens to my personal belongings if my home goes into foreclosure, can i buy a home after going through foreclosure, article sources.

We use primary sources to support our work. Bankrate’s authors, reporters and editors are subject-matter experts who thoroughly fact-check editorial content to ensure the information you’re reading is accurate, timely and relevant.

“ Foreclosure Process ” U.S. Department of Housing and Urban Development. Accessed on Feb. 8, 2024.

“ Chart: Judicial v. Nonjudicial Foreclosures ” Nolo. Accessed on Feb. 8, 2024.

“ Foreclosure Avoidance Counseling ” U.S. Department of Housing and Urban Development. Accessed on Feb. 8, 2024.

“ Posting and publishing notice of sale of real property ” North Carolina General Assembly. Accessed on Feb. 8, 2024.

“ Non-judicial foreclosure and homeowner rights ” Judicial Branch of California. Accessed on Feb. 8, 2024.

“ If I lose my home to foreclosure, can I ever buy a home again? What impact will a foreclosure have on my credit report? ” Consumer Financial Protection Bureau. Accessed on Feb. 8, 2024.

“ Deficiency Judgments After Foreclosure ” NY Courts. Accessed on Feb. 8, 2024.

“ U.S. Foreclosure Activity Increases From 2022 But Still Below Pre-Pandemic Levels " ATTOM Data. Accessed on Feb. 8, 2024.

“ Foreclosure and Eviction for Homeowners ” Michigan Legal Help. Accessed on Feb. 8, 2024.

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How to write an effective hardship letter [and prevent foreclosure]

Homeowners can experience events over which they have no control such as injury, illness, divorce, death, layoff, new or worsening disability, incarceration and more. This may result in financial hardship, making payments on bills, mortgages and other debts a challenge. If a homeowner begins to miss mortgage payments, they might need to write a financial hardship letter to their lender/loan servicer to get those payments back on track and prevent foreclosure. In this blog, I’ll describe the components of an effective hardship letter. 

Why a hardship letter is needed

The first step when you miss a mortgage payment, or even anticipate missing a payment, is to contact your servicer. All mortgage lenders/servicers offer some form of “loss mitigation,” which are options to prevent foreclosure. However, loss mitigation options are not automatically put into place when a payment is missed; you must contact the servicer to apply. Missing a payment or two that can be brought current within a few months will likely be resolved with a call to the servicer and verbal promise to pay. 

If the financial hardship is more permanent and will result in three or more months of missed payments, the servicer will require completion of a loss mitigation packet. This “workout packet” includes an application for mortgage assistance, documentation to verify income and expenses, and an explanation of the hardship and why it is preventing you from making payments. Some servicers ask for a description of the hardship on the application itself, while others require an actual letter. The hardship explanation is needed so the servicer can assess your financial situation and determine any suitable solutions. A hardship letter is also a great way to organize your information and thoughts to best state your case.

What to include in a hardship letter

The letter does not have to be long, detailed and complicated. As my mom always used to say, “KISS!” (Keep It Simple, Sweetie.) It should be short — a few paragraphs to a page at the most. It is a chance to explain to the servicer what happened, any effort made to resolve the hardship and the requested solution. 

Here are the specifics on what to include:

• The date, your name, address and phone number.
• The lender/servicer and loan number.
• The date or approximate time frame when the hardship started.
• The expected timeframe of hardship — short term (six months or less) or long term.
• Describe your goal. Is it to keep your home or sell it?
• State the facts, not emotions. Tell the truth about what happened. Keep it brief, but be sure to add all necessary details. Focus only what has currently happened and how that has impacted your ability to make the payments.
• List what you have done to try to resolve the hardship. For example, you reduced your expenses, picked up a second job, etc.
• Explain why you need help from the lender to avoid default. List the options have you explored to address the delinquency and why they haven’t worked. For example, refinancing is not possible due to poor credit, there is not enough equity in the house so selling is not an option (and explain why not).
• Avoid stating there might be help from family or friends, which could hurt your chances of a workout option and receiving assistance from the servicer. A workout option (also known as a workout agreement) is any alternative solution or combination of alternatives a lender might be willing to offer the borrower to avoid foreclosure. These options could include forbearance, repayment plan, modification, deferral of payments, or partial claim (which applies to FHA mortgages only).
• Specify what solution you are requesting from the servicer. Is it a lower payment, lower interest rate, pause in payments, deferral of missed payments to the end of the loan?
• State how the desired solution will impact your financial situation if approved. What is your long-term plan with the house if foreclosure can be avoided?

View our hardship letter example for additional guidance and to get started.

After writing the hardship letter, review it carefully. Does it state the situation clearly and include just the facts? Consider having someone else read it over.

We offer free Foreclosure Prevention Services to assist you!

Do you want assistance with writing your hardship letter? Or do you have other questions about strategies to avoid defaulting on your mortgage? If so, our nonjudgmental, HUD-certified foreclosure prevention counselors can help — at no cost to you! Call 888.577.2227 to schedule a free, confidential appointment, or get your support online .

Author Marjorie Klimek is a certified financial counselor with LSS Financial Counseling. One of her areas of expertise is foreclosure prevention.

• Kreyòl Ayisyen

I got a letter from my mortgage servicer about my application for help to prevent foreclosure of my mortgage. Can you help me understand some of the terms?

When you apply for help in avoiding foreclosure you are likely to come across words and technical terms that may be unfamiliar to you.

This is another reason why it’s a good idea to get professional help from a  HUD-Approved Housing Counseling Agency .

Here are a few common terms you may find when you prepare your application:

Loss mitigation

Loss mitigation refers to the steps mortgage servicers take to work with a mortgage borrower to avoid foreclosure . Loss mitigation refers to a servicer’s responsibility to reduce or “mitigate” the loss to the investor that can come from a foreclosure. Certain loss-mitigation options may help you stay in your home. Other options may help you leave your home without going through foreclosure.  Loss mitigation options may include deed-in-lieu of foreclosure, forbearance, repayment plan, short sale, or a loan modification.

Most loss-mitigation applications require you to describe the change in financial circumstances that is preventing you from paying your mortgage. This is referred to as your “hardship.” A hardship may be unemployment, temporary or permanent disability, uninsured medical expenses for a family member, divorce, death, or other circumstances generally beyond your control that significantly reduce your income or increase your expenses. When you submit your application, you should explain your hardship and be able to provide evidence, such as a copy of a divorce decree or checks you wrote to pay hospital bills.

Investor requirement

After your lender gives you a mortgage, it may sell your mortgage to another investor. If your mortgage has been sold to an investor and you run into trouble making payments, the investor will determine what type of loss-mitigation assistance is available to you if you file a complete application for assistance. Though the new mortgage rules do not require investors to offer alternatives to foreclosure, most investors do so because avoiding foreclosure can reduce their losses.

Tip: You have the right to know who the owner or investor is and how to contact them.

Net Present Value calculation

Investors may use a mathematical formula to figure out if they are financially better off foreclosing on your loan or offering you an alternative that avoids a foreclosure. This formula is called a “Net Present Value” or “NPV” calculation. When you apply for loss mitigation, the investor or the mortgage servicer will generally calculate the Net Present Value of the loss-mitigation options that may be available to you and use that information to determine whether to go through with a foreclosure.

Your servicer might say that you are not eligible for a loan modification because of the Net Present Value or “NPV” result. If so, you have the right to certain information that was used in the NPV calculation and you should check to make sure that information is accurate. If you need assistance understanding the NPV calculation you can use the CFPB's "Find a Counselor" tool to get a list of housing counseling agencies in your area that are approved by HUD. You can also call the HOPE™ Hotline , open 24 hours a day, seven days a week, at (888) 995-HOPE (4673).

Trial modification

Under certain circumstances, your servicer may offer to permanently change or “modify” your loan so that your monthly payment is reduced. Usually, your servicer will first put you in a trial modification for a few months to make sure that you are able make the new payment. If you make the trial payments as agreed, your servicer should finish the paperwork to make the change permanent. Your servicer may not start a new foreclosure (or if you are already in foreclosure, may not complete the foreclosure sale) so long as you pay your trial-period payments on time. However, your loan may still be considered delinquent for some purposes during the trial period, because you are making payments that are less than your regular amount.

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SBI Home Loan Closure Letter Format Sample in Word

Whenever you want to close your home loan in the State Bank of India, then you need to write a loan closure request letter to the bank. Here you can find some sample loan closure letter formats which you can download in Word format.

After closing your loan in SBI make sure that you received all your documents which you have submitted while applying for the loan, and NOC(No Objection Certificate), Non-Encumbrance certificate, if there is any lien on your house then remove that lien at your registrar office.

SBI Home Loan Closure Letter Format (When All EMIs are Paid)

The Manager,

State Bank of India,

Bank Address.

Sub: Request to close my home loan.

Dear Sir/Madam,

I,__________(your name) have taken a home loan from your bank bearing loan account number ___________(Your loan account number). I have cleared all my home loan EMI dues as of this month i.e __________(mention last paid EMI month, year). 

Hence here I would like to request you to kindly close my home loan and please guide me about the further process if any.

Thanking you.

Yours  Sincerely,

SBI Home Loan Closure Letter Format (For Pre closing / The Home Loan).

The Bank Manager,

Sub: Home loan pre closing request.

My name is __________(your name) writing this request letter to pre close my home loan associated with loan account no. _____________(your home loan account number).

I would like to clear my total outstanding loan amount in one payment, so kindly guide me the process of pre closing my home loan

Yours sincerely,

After Closing the Home Loan Online

Sub: Home loan closing request.

With due respect I am___________(your name), writing this request letter to close my home loan bearing account no. ______________(loan a/c number). 

I have cleared my outstanding loan due online, and please find the enclosed loan payment receipt enclosed with this letter.

Here I am requesting you to kindly close my home loan and issue all the necessary documents.

What is the interest rate on SBI home loans?

SBI is offering home loans with an interest of 6.70% for a loan amount upto 30 Lakhs, and 6.95% for loan amounts of 30 Lakhs to 75 Lakhs, and 7.05% for above 75 Lakhs loan amount.

How many days will it take the bank to return my documents after closing the home loan?

In most cases it will take a maximum 7 days to return your documents and NOC after clearing the home loan.

Can I close my SBI home loan before the tenure?

Yes , you can close your SBI home loan even before the tenure.

Are there any pre-closure  charges if I close my SBI home loan ?

No  pre-closure charges will be levied if you close your SBI home before the tenure.

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