How to Write a Loan Modification Hardship Letter

How to Write a Loan Modification Hardship Letter

Article by Simon Volkov

A loan modification hardship letter is a crucial element of the loan modification process. Homeowners struggling to meet home loan obligations must contact their mortgage lender’s loss mitigation department to determine if they are eligible. If so, borrowers must provide financial records along with the letter of hardship.

While there is no established protocol for writing a loan modification hardship letter, there are a few strategies that can improve chances of a successful outcome. In 2009, I interviewed bank loss mitigators, real estate attorneys, and mortgage lenders to uncover industry secrets for obtaining short sale approval. The most consistent response was mortgage lender representatives prefer handwritten hardship letters.

Obviously, the loan modification letter should be easy to read. Those who have eligible handwriting should ask someone else to write out the letter for them when possible. Otherwise, use a word processing program and type the letter.

Lender hardship letters need to be succinct, yet provide sufficient information to help loss mitigators understand the events which caused financial setbacks. It is important to remember bank loss mitigators are responsible for hundreds of loan modification, mortgage refinance, and short sale requests. They do not have time to read lengthy letters of hardship.

When writing loan modification hardship letters, stick to the facts by creating an outline of major events. These might include chronic health problems, unemployment, divorce or death of a spouse.

It is also a good idea to explain your plan for staying on track future mortgage payments. If you have inherited money, taken a second job, or received a raise, include this in the hardship letter. Borrowers are required to provide proof of income when applying for a loan modification. Homeowners who inflate stated income amounts could be charged with mortgage fraud. It is in your best interest to state the truth when applying for a home loan modification.

In 2009, President Obama launched the Making Home Affordable program to assist borrowers in obtaining affordable loan modifications and mortgage refinance. Individuals who wish to participate in the program must have modified loan requests submitted to their lender prior to the December 31, 2012 deadline. Program details are available at MakingHomeAffordable.com.

Borrowers who do not qualify for Making Home Affordable programs should discuss the option of entering into a short sale agreement with their lender. While a short sale does not allow borrowers to retain their home, it can offer financial relief.

It is important for borrowers to conduct research and determine available options. In addition to loan modifications, mortgage refinance, and short selling, borrowers might qualify for a forbearance agreement or deed in lieu of foreclosure. Taking time to gather the facts allows borrowers to make an informed decision about their most valuable asset.

About the Author

Real estate investor and author, Simon Volkov has helped hundreds of homeowners learn how to craft the perfect loan modification hardship letter. Simon’s presents a comprehensive real estate article library to share information and resources on a wide range of real estate topics. Learn more by visiting www.SimonVolkov.com.

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