5 Steps to a successful loan modification hardship letter
1. Be honest
You do not want to lie on your hardship letter. If you do, chances are it will come back to bite you. Your hardship letter should include documentation to prove that you are unemployed, or receiving a certain amount of income; if you make a story up, or exaggerate, it will do you no good. If you truly in a bind, and can’t make payments on your home for a good reason, it will shine through in your letter and your loan modification will have a better chance.
2. Appeal the lenders sense of ethics
The above tip might not sit well with you. After all, the lender was partly responsible for the predicament you’re in, right? Regardless, you should always end your hardship letter with an appeal to their sense of right. For example, in my hardship letter I wrote something like, “I have done the best I can to make payments; sacrificed many things I enjoy in life, sold my car, and reduced other debts; borrowed money from friends and family, and more. I cannot keep doing this, and feel that I have done everything I can to keep my house. The rest is up to you. I only ask that you reciprocate the same effort into the loan modification as I have done to keep my house.
3. Make Your Request
In the subject-line and the first paragraph of your hardship letter, state exactly what you are requesting. Reiterate this request in slightly different words at the conclusion of the letter. Also, at the end, make sure to quickly state what you hope to achieve. Ask directly for a loan modification and be sure to tell them that a loan modification is your last, and only resort at this time.
4. Be Humble and Thankful
To reach the point where you have to write a financial hardship letter means that you are in deep financial trouble and this is basically your last resort. Don’t get into any blame games or side issues. Be respectful and thank the addressee in advance for considering your situation. For example, you might mention something like “I realize I made the choice to purchase this home, and that it may have been a mistake, but this is where I am now and a loan modification is the only way I forsee keeping my house. Thank you for taking a moment to read this, and I hope to hear from you soon.”
5. Give Enough Information
Your letter should provide enough detailed financial and related information so that the reader can easily understand your situation. Attach clarifying documents as necessary including: cash flow statements, bank statements, income tax statements, invoices, letters, etc. If you do not provide sufficient information you WILL have to fax or mail it at a later date, which will only delay your loan modification . Take the time to gather everything that backs up your story, make copies, and send it ALL.
Best of luck.
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Thanks for this - I’ve been working hard to get squared away with my loan modification process and trying to get a good understanding of everything I need to have in order. It’s been stressful but I’ve found some great resources like this and am grateful.