The modification hardship letter is the most important document you will have to submit when you make a loan modification request. This letter basically explains to your lender why you are experiencing difficulties in paying your monthly mortgage dues. Therefore, it must provide a clear and concise picture of your current financial position and convince the lender that there is no better option than to enter into a loan modification agreement with you.
The hardship letter gives you the opportunity to present the circumstances of your financial difficulties and should include verifiable information to support your claims. To start with, your reasons should fall within the list of acceptable hardships that may qualify you for a loan modification. From the lender’s viewpoint, acceptable hardships would include:
- A decrease in regular income, loss of a job or decreased working hours
- Death of homeowner, spouse or an immediate family member which decreases paying capacity on the mortgage or results to an added expense
- Illness of a family member resulting in unforeseen expenses
- Separation or divorce
- Payment shock resulting from an adjustable rate reset
- Inevitable work-related relocation resulting to unanticipated expenses
- Increase in basic living expenses due to inflation
Now before you write an essay on your current predicament, bear in mind that your lenders are receiving thousands of other loan modification requests and will not have all the time to read your horror story. You should write your letter in a way that will coax your lender to read beyond the first or second paragraphs. So your letter should be straight to the point and comprehensive; emotions have no place in a modification hardship letter. Remember, you are not soliciting sympathy here. You are providing a win-win solution to both parties involved – you and your lender.
Present a short and objective narration of the circumstances that got you into payment default and indicate the exact dates of their occurrences so your lender will have a point of reference. If you or your spouse has taken efforts to seek replacement income from other part-time jobs, inform your lender about this, as additional income sources are always great news for your lender.
Lay out a clear plan on how you intend to make your payments if you get an adjustment on your monthly mortgage dues. Show every intent to get back on track with your payments so you can keep your home. Provide your lender with an added assurance that you are a responsible homeowner with a motivation to maintain a good track record. It may seem unrelated, but if you are a member of community organizations, let your lender know about this. They will interpret this as a driving force for you to maintain a positive reputation in the public eye.
Millions of other homeowners are in a similar predicament, so you modification hardship letter equates to an impressive resume for someone in search of a job. The success of your loan modification agreement largely depends on this and how you negotiate the deal with your lender. When you do it well and remain pro-active, lenders will love to work with you as it will actually mean less work for them.
