How to Write a Loan Modification Hardship Letter

Learn the ins and outs that are important to know before writing a loan modification hardship letter.

Difficulty: Moderate

Instructions

1. Explain the reason you are writing the hardship letter:
   
   Example:
   We love our home, but due to the circumstances described below we are not able to keep up with our required mortgage payments.

2. Describe the circumstances that cause your hardship.
   
   Examples for hardships:
   - Job loss
   - Reduced salary/pay
   - Job transfer
   - Illness
   - Medical Bills
   - Divorce
   
   Be as specific as you can. You want your lender to accept a possible loss. Be honest, open and thorough. Give the lender the feeling that you 'have your act together'.

3. Provide financial information.
   
   Usually a lender asks last years W-2 or tax return as well as the most recent paystubs (last 2 is common).
   In most cases it is also necessary to provide details about your monthly expenses to paint the financial picture that will help the lender to make a decision. List all expenses you have. Don't hold back, it will help to know what you spend and where you may be able to save expenses to afford a new payment proposed by the lender.

4. Describe steps you have taken to solve your situation (no matter, if successful or not).
   
   Examples:
   - Have you searched for a new job?
   - Have you talked to a counselor?
   - Are you already cutting back on your expenses?
   - Have you explored additional income sources?

Tips & Warnings

• Decide if you need professional help to write your hardship letter and negotiate with your lender or if you can do it yourself - there are some great sources of help out there.
• When consulting a loan modification company, be aware of their deliverables. Don't get caught by false promises. Each situation is different and no company can guarantee you success.
• This article does not constitute as legal advice. Please consult an attorney if you think your situation requires legal counsel.

Resources

• Loan Modification Tips

[amylaine]

on 12/12/2009 Some creditors are harder to get loan modifications for especially after income has depleted or is non existent. It is important to document how you are helping your self and what your plans are. Not just that you are hopeful that a job will come your way, but be specific on what you are doing to try to pay your bills.

[debdavis]

on 6/13/2009 thank you for these great tips - I will try this very soon.