A well-written hardship letter can make or break your ability to be approved for a loan modification. The hardship letter needs to lay out the reasons why you are facing financial difficulties and why you would be able to meet your mortgage obligations under revised terms.
Preparation is always the key to success, so preparing a checklist to guide you toward covering all aspects that need to be included in your hardship letter will increase your odds of approval. Below are the three key points that you need to include in your letter.
1. Explain why you are facing financial difficulties. Did you lose your job? Did you or a family number become seriously ill? Have you incurred an inordinate amount of medical expenses? Outline for your mortgage bank the circumstances that have put you in your current situation.
2. Create a chronology or timeline of your situation. What you want to be able to show the lender is that you weren't late or delinquent in payments until extenuating unexpected circumstances arose that caused your current financial crisis. You're showing the bank that you've been a responsible debtor up until the time of your financial hardship.
3. Develop a plan for your future. Let the lender know that you are a proud homeowner who wants to do everything within your ability to meet your debt obligations and continue to enjoy home ownership. If you plan to sell some items, let them know that. Outline a new budget for yourself and share that with the bank to show them that you are taking measures to protect your investment.
The key to loan modification approval is the hardship letter. By demonstrating to your lender that your current situation was beyond your reasonable control and making a promise to fulfill your future obligations, you will have a better chance of being approved for a mortgage loan modification.
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