During these struggling times many homeowners are contacting their lenders for assistance but are not aware they must write a detailed hardship letter when first applying for a loan modification. Even most people that are aware of the required hardship letter are not exactly sure what to say.
In order to qualify for a loan modification you as the homeowner must write a hardship to your lender to prove that you are facing financial difficulties. When in the process of writing this letter make sure you take your time, put in effort, and make sure it is as detailed as possible. But make sure that you letter is not too long and straight to the point.
You do not want to write a 3-4 page letter because most reps will not take the time to read the entire letter. Keep in mind that mortgage servicers and lenders are completely overwhelmed with modification requests because of this economic crisis. That is why you want to keep it short and to the point.
The hardship letter is evidence to your lender letting them know you can afford your home, but just not the current loan. You must remember to be as honest as possible because your lender will require all of your financial information and run a credit report as well. If your lender comes to find that you have lied about your financial situation, your request for a loan modification will automatically be denied.
Below I have listed a variety of hardship examples that lenders will consider during the loan modification process:
- Reduced Income
- Loss of Job
- Death in family
- Military Duty
- High Medical bills
- Significant damage to Property(such as vandalism or natural disaster)
Now that you have an idea of what hardships your lender is looking for you are now ready to begin writing your hardship. But keep in mind that this is only one factor of the loan modification process. Your lender will not automatically approve you for a modification just by reading your hardship letter, there will be many other factors involved as well.
When writing your letter its important to understand what your lender wants to hear. They want you to write out a solution that makes sense and will help you afford your payments and stay in your home. You can let them know what you feel you can afford each monthly payment or even what modification programs you think you may qualify for. This will make your lender aware that you are ready to take on a new affordable loan and continue paying your monthly payments.
What you do not want to do is tell your lender your considering selling your home, stick with letting them know you need an affordable payment to keep the home. You always want to keep your tone very polite and respectful, do not bash your lender and blame them for your financial difficulties. Remember your asking your lender for assistance to help you save your home.
At the point of completing your hardship letter make sure to conclude the letter with a friendly note. This letter is a very important key in modifying your loan and saving your home.
If you would like to see examples of members in our forum who have placed theirs online, please join our forum with over 17,000 homeowners.
My name is Maurice “Moe” Bedard. I am the founder of America’s #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.