Hardship Letter for Loan Modification

Hardship Letter for Loan Modification

A hardship letter for loan modification that is well-written and communicates effectively may make the difference between whether a loan modification request is approved or denied. Typically, mortgage lenders require a hardship letter prior to approving any loan modification requests. The hardship letter allows mortgage lenders to evaluate to some extent the cause of mortgage delinquency for a homeowner.

Prior to writing a hardship letter for loan modification homeowners should consider learning about how to write a hardship letter, what lenders may be looking for, and what questions to answer in the hardship letter. This may help homeowners in the quest for loan modification approval.

Writing a Hardship Letter for Loan Modification

Writing a hardship letter for loan modification can be a difficult task requiring a high level of focus. High quality hardship letters should typically stay concise and to the point since mortgage lenders may review thousands of hardship letters every day. One to two pages should be enough for homeowners to communicate the necessary information in the letter.

Perhaps the most important aspect of writing a hardship letter for loan modification is clearly identifying the cause of economic hardship for the homeowner that contributed to missed mortgage payments. It is important for homeowners to demonstrate a bona fide hardship led to the missed mortgage payments rather than financial recklessness.

Possible Economic Hardships to Identify in a Hardship Letter for Loan Modification

Mortgage lenders can be strict in their evaluation of a homeowner’s application for a loan modification so it may not be wise to include reasons for a financial hardship they do not consider legitimate. Mortgage lenders commonly consider these reasons listed in a hardship letter for loan modification as bona fide causes for financial hardship:

  • A death in the family and/or death of co-borrower
  • Separation of marriage and/or divorce
  • Payment shock from higher mortgage payments as a result of an adjustable rate mortgage
  • Military duty
  • Medical emergencies or severe illnesses
  • Reduction of income and/or loss of employment

Questions to Address in a Hardship Letter for Loan Modification

Some mortgage lenders like to see certain types of questions answered in a hardship letter for loan modification. Homeowners may wish to consider answering these questions, but bear in mind the answers should remain as short and direct as possible.

  • What is the loan modification applicant doing to rectify the cause of the financial hardship?
  • How many mortgage payments were missed as a result of the financial hardship?
  • Is the loan modification applicant able to currently pay any of the missed mortgage payments?
  • Is the financial hardship still ongoing, and if so, how long is it expected to last?
  • What series of events contributed to mortgage delinquency?

Help With Hardship Letter For Loan Modification From Foreclosure Attorneys

Foreclosure defense attorneys may be able to provide significant help with a homeowner’s hardship letter for loan modification. These attorneys may review the hardship letter to offer advice or even write the letter for a homeowner. Foreclosure defense attorneys typically have extensive experience dealing with and negotiating with mortgage lenders. Homeowners may wish to consult with a foreclosure defense attorney prior to submitting their hardship letter.