If you’re going through the home loan modification process or a loan workout, one of the things you’ll need is a letter detailing your financial hardships. This is a hard letter to write, not only are you admitting that you need help, you must also present evidence that you are suffering a hardship.
Banks and mortgage companies do have the power to modify your loan, but they will require you to convince them through your hardship letter that you honestly need the financial accommodations. Before you begin writing the letter, you need to do some important homework. Make sure you have all your financial records for the past year on hand, especially your history with the mortgage company. If you’ve always made your monthly payments, be sure to stress that fact in your letter.
By some chance if you’ve been late a time of two in the past, acknowledge that, give the reason why, and point out that you have always brought your account back to a current status. Another reason to find all your financial records from the past year is to help you make a list of all your financial difficulties. You can give them the exact dates you were in the hospital or when you were laid off your job. This is good information to have available both for the hardship letter and the rest of the mortgage modification process.
Lastly, using this information you can realistically figure out how much you can afford to pay on your mortgage each month. It is important to send your letter to an actual loan officer, not a “to whom it may concern.” Not only are those letters more likely to be discarded without any contact being made, but it leaves you with no knowledge of who is handling your mortgage modification and no way to get in touch with that person. The central part of your letter should be a basic outline of your current life issues (for example, death of a loved one or illness or job loss) that is keeping from meeting your financial obligations.
Try to keep your letter short and, most importantly, to the point. It is perfectly fine if your letter is only two pages, so long as you get your message across. Remember to keep your tone polite and respectful in the letter. This is a difficult time and you might be angry, afraid, or frustrated, but don’t let any of that show in your letter. Also, it would help the process go faster if you included any supporting paperwork as an attachment; you might append your letter with a bank statement, a wage statement, or any other official documentation of financial difficulties.
The second most important aspect of a hardship letter is letting the lender know that you want to find a solution that works for both you and the mortgage holder. You want to make payments, you want to keep your house – you just can’t afford them right now at that amount. Reiterate that you want to work with the lender to find an amount you can afford.
The purpose of a hardship letter is to explain your financial difficulties to your lender and to convince them that a home loan modification is the only way for you to keep your home. You are a hardworking homeowner who has had some bad luck. This letter could be the start of the second chance you need.