Hardship Letters to Lenders
Hardship letters are an "x-factor" that can help you overcome a lender's normal credit requirements. Some lenders require a hardship to obtain certain loan services, especially loan modification. A hardship letter gives you a chance to explain your financial situation that lead to you missing payments or developing a spotty financial history.
Other People Are Reading
-
Identification
-
Lenders frequently require a written explanation for bad credit or missed payments called "hardship letters." In the mortgage industry, a hardship letter is a required part of the loan workout program, such as if you want to lengthen the terms of your promissory note, according to the Ohio Department of Commerce. The hardship letter acts as a short biography that proves you experienced a disaster that was beyond your control.
Features
-
The typical hardship letter starts with the reason why you are writing the company, such as defaulting on your mortgage, and the type of an action you request — usually loan modification. Include any special circumstances, such as having to support a disabled child, and the reasons that led to your default. The explanation for what caused your default is the most important part of the letter and needs to be something that is not due to irresponsible behavior on your part. Some good reasons include illness, reduced income, a failed business start-up, medical bills and divorce. A gambling problem or not saving money will not likely be considered a hardship.
-
Budgeting
-
Tell the lender about your finances and how much money you can put towards the loan. Also, if you seek loan modification, offer a plan to repay the lender that benefits the company; Saying you will never be able to pay off the loan is not a plan. For example, you might offer to pay $600 a month if your previous payments were $800 and remit any defaulted payments. Have a plan to get your finances back on track, such as taking on a second job or working overtime.
Tips
-
Keep your hardship letter to one page or if you have a lengthy story, two pages maximum, according to LoanWorkout. Prepare to furnish evidence that proves your hardship, such as a letter from an employer detailing your reduction in hours or a divorce decree. You can also hire a mortgage advocate to help you draft your letter. Include contact information for yourself and any advocates.
-
