Loan Modification Hardship Letter Tips

For those who have to write one in the near future, a few loan modification hardship letter tips certainly can’t hurt. In the loan modification process, the hardship letter is sent with financial documentation to justify your request for a lower rate, reduction in principal owed or lower monthly payments. Typically, a truly life-altering event must occur for a loan modification hardship letter to be viable in the eyes of a given lender. If you can prove one, your odds of renegotiating are much better. Regardless, the following loan modification hardship letter tips can help in locking down the deal you’re looking for.

Things you'll need:

• Computer with word processing software

1. Keep your hardship letter short and sweet. Typically, these letters are read and handled by lenders’ “loss mitigation” departments. Since the housing market crash and subsequent recession, no other type of employee has been busier. Foreclosure rates have been through the roof the past few years, which means the average loss mitigation employee is stretched to his or her limits. By keeping your letter concise, clear and to the point, you are helping them help you, so to speak. As a rule of thumb, try not to let your hardship letter exceed two pages.
2. There must be a real event in order for the hardship letter to work. The things that qualify as a significant financial event in a lender’s eyes range from reduction in income to marital separation, so it shouldn’t be too hard to find an argument. Just make sure you follow this loan modification hardship letter tip closely because saying something to the effect of “I couldn’t afford the house in the first place” probably isn’t going to cut it.
3. Make an effort to convince the bank that the loan modification will work for them. Remember, the loan modification process is done completely at the discretion of the lender. The only reason they have programs such as this is because a “good” loan is worth more to them than the one-time proceeds from a foreclosure sale. Thus, you should be sure to let them know in your loan modification hardship letter that they can rely on you. Getting your loan modification request accepted requires proof of your ability to keep up with the modified loan—not just an inability to pay the original one off. By assuring the lender that working with you is in their best interest, you can help to ensure that your plan for loan modification will be executed successfully.