Tips For Writing a Loan Modification Hardship Letter to Mortgage Lenders

Writing a loan modification hardship letter is an important task that should not be taken lightly. Financial letters of hardship allow borrowers to provide mortgage lenders with details of events that caused them to become delinquent on home loan payments and explain why they need to modify the terms of their home loan.

Although there is no standard protocol for writing a loan modification hardship letter, strategies can be implemented to improve chances for a successful outcome. Last year, I wrote a book about real estate short sales and had the privilege of interviewing mortgage lenders, bank loss mitigators, and real estate attorneys. Every professional stated mortgage service providers prefer handwritten letters of hardship.

With that being said, the debt hardship letter must be easy to read. Borrowers with poor handwriting should ask someone else to write out the letter. Otherwise, use a typewriter or word processing program.

Lender hardship letters should be short and to the point, yet provide enough information to help bank loss mitigators understand the circumstances which led to financial problems. Loss mitigators are responsible for handling loan modifications, mortgage refinance, foreclosure and short sale transactions and do not have time to read lengthy letters of hardship.

When crafting the loan modification hardship letter it is important to stick to the facts. Start by creating an outline of major events. These might include loss of employment, divorce, death of a spouse, or chronic health problems.

When possible, explain your plan for staying on tract with future home loan payments. If you have received a raise, taken a second job or received inheritance money, include this information in the hardship letter.

Borrowers must provide financial records and proof of income when applying for a loan modification. Borrowers who provide false income statements could be charged with mortgage fraud. Therefore, it is crucial to be honest when applying for a modified home loan.

One loan modification option is Obama’s Making Home Affordable program. Borrowers must submit modified loan requests to their mortgage lender prior to the December 31, 2012 deadline. Eligibility requirements and criteria are published at

If borrowers do not qualify for loan modification or mortgage refinance through Making Home Affordable programs, they may qualify for the foreclosure alternatives program. This program allows borrowers to enter into a short sale or deed in lieu of foreclosure agreement to obtain financial relief.

It is important for borrowers to conduct research and determine available home loan options. In addition to loan modifications, mortgage refinancing, and short selling, borrowers might qualify for a forbearance agreement or deed in lieu of foreclosure. Taking time to gather the facts allows homeowners to make informed decisions about one of their most valuable assets.