How to Write a Hardship Lettter for a Loan Modification

You can submit a hardship letter to your mortgage company.

When you are in a difficult financial situation, you may need to take proactive steps toward saving your home. In lieu of falling behind on your mortgage payments or other debts, you may present a hardship letter that enables your mortgage company to consider your situation. A well-written hardship letter might compel your loan servicer to offer a more affordable home loan. However, you will need to demonstrate the inability to afford your home loan under the current conditions.

Things You'll Need

• Tax returns
• Pay stubs
• Bank statements
• List of expenses

Instructions

1. Call your mortgage servicer to discuss the possibility of modifying your home loan. Inquire about the types of items you may need to begin the loan modification process, such as a hardship letter and income documents. Obtain a fax number or mailing address, as well as the name of the individual who will process your modification request.

2. Provide a written description of your hardship. Incorporate specific reasons for your lender to consider, such as changes to your regular income or health issues, or that your adjustable-rate mortgage has become too expensive for you to maintain.

3. Include a list of actions that you have taken to improve your situation, such as reductions to your current budget. Mention cutting premium cable channels, using coupons for groceries, searching for a better-paying job or similar steps you have taken toward maintaining your home.

4. Describe the result you are seeking. Ask for a loan modification that provides a long-term affordable interest rate. Explain how a modified loan that lowers your mortgage payment $150 per month, for example, impacts your family's finances. For instance, if your net pay is $3,000 per month and your expenses amount to $3,150, your lender may identify a specific solution to consider.

5. At the end of your hardship letter, include the date and signatures for each borrower listed on the loan, and list your phone number or email address. Forward your loan modification letter as directed, to the appropriate representative.

6. Communicate with your loan modification representative. Follow-up calls may be necessary to discuss information you provided or to discuss possible solutions. Reply promptly to messages from your loan modification representative during the review period.

Tips & Warnings

• Renegotiate your request for a loan modification if you are not satisfied with your lender's response.

• A HUD-approved counselor may be able to help you prepare a more detailed letter for your situation (see Resources).

References

• U.S. Department of Housing and Urban Development: HUD Approved Housing Counseling Agencies
• Bankrate; Writing a Hardship Letter for a Loan Mod; Kristie Lorette; March 2011
• Nolo: The Making Home Affordable Program -- Negotiating a Workout
• HSH.com; How Not to Write a Loan Modification Hardship Letter; Gina Pogol

Resources

• U.S. Department of Housing and Urban Development: Local Office Directory