5 Things in a Loan Modification Hardship Letter

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A financial hardship letter clarifies to your creditor why you are in financial distress and requests a point remedy to help you through the crisis. There are different reasons for writing a hardship letter, but the most common these days are:

1. Requesting a Loan Modification or restructuring

2. Requesting a fleeting sale to avoid foreclosure

The hardship letter is a primary requirement in the loan application process. Your loan modification attorney will question you to submit it along with your other financial documents, so that they can evaluate your situation and present a strong case to your lender.

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 finance 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 details and keep only those that are relevant to your case.

2. Get straight to the point. Start by stating the purpose of your letter (whether it’s a loan modification or a fleeting sale), so that the reader knows outright what to guess. Basically, it should say “I need you to buy my home/reform my finance/give me a decrease interest rate,” in a way that compels them to find out why. You can use the succeeding paragraphs to give reasons for it in more detail.

3. Give reasons for your hardship. First, make sure your problem really qualifies as a financial hardship. Your goal is to convince your bank that you have no other means of finance help, and that you can get back on track if they do grant your question for. Examples of valid hardships include:

1. Loss or reduction of income (loss of employment, demotion, etc.)

2. Natural disasters

3. Illness and medical expenses

4. Death of a family member or co-borrower

5. Divorce, separation, or other legal expenses

6. 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’ve customary 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 out of your control.

4. Restate your question for. End your letter by reiterating your purpose, in slightly different words. Ideally, your previous paragraphs should give reasons for 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 discrimination to your reader. Finally, thank them in advance and mention that you’re looking forward to continuing business with them.