A "hardship letter" is a key component and requirement of the loan modification process. A "hardship letter" can also be crafted for requesting the lender to approve a "short sale". We will discuss how this relates to the loan modification process.
One of the first things we discuss with each new client is to ask them what type of "hardship" they are encountering? If they fall into the category that reflects the qualification for loan modification, we tell them that they will have to write a letter describing their "hardship".
When writing a "hardship letter" for a home loan modification, keep in mind that the lenders really want to see why you have fallen behind with your mortgage payments. It should be clear, honest, and contain just the right amount of detail. The way you write it can literally spell the difference between keeping and losing your home. Here's how you can write a hardship letter that puts your point across and gets you the best loan modification deal.
1.] Keep it concise. A typical lender can only spend five minutes reading your letter. Try to keep it to a single page. Any longer and they might not have time to really read it through. Lose all unnecessary detail and keep only those that are relevant to your case.
2.] Get Straight to the Point. Start by stating the purpose of your letter, so that the reader knows outright what to expect. Basically, it should say "I need you to buy my home/restructure my mortgage/give me a lower interest rate," in a way that compels them to find out why. You can use the succeeding paragraphs to explain it in more detail.
3.] Explain your hardship. First, make sure you problem actually qualifies as a financial hardship. Your goal is to convince your bank that you have no other means of mortgage assistance, and that you can get back on track if they do grant your request. Hardship can be any of the following:
A.] Loss or reduction of income.
B.] Natural disasters.
C.] Illness and medical expenses.
D.] Death of a family member or co-borrower
E.] Divorce, separation, or other legal expenses.
F.] Military service
It doesn't have to be one of these things, of course. Each lender has its own standards, and the letter's purpose is to give them a more personal look into your situation. Once you have established your hardship, provide details that will help strengthen your case. Make sure to tell them how you got into the situation and why it's our of your control.
4.] Restate your case. end your letter by reiterating your purpose, in slightly different words. Ideally, your previous paragraphs should explain that it's the only way to stop foreclosure. Make it clear that you intend to get back to your regular payments once the loan has been modified.
5.] Be humble. One thing you should never do is imply that your situation is your lender's fault. Instead of pinning the blame on anyone, simply tell things as they are and leave the judgment to your reader. Finally, thank them in advance and mention that you are looking forward to continuing business with them.
Following these simple, but clear guidelines for writing the "hardship letter" is "Empowering". It will make a major difference in whether you are able to successfully complete the loan modification process.
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