How To Write An Effective Hardship Letter?

By Author: John Mclaren
Total Articles: 10
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As the economy continues to struggle, more Americans will be affected by unemployment and may face foreclosure. If you find yourself in a financial bind, a well written hardship letter directed to the bank or Mortgage Company is essential. Although the hardship letter is most often associated with borrowers facing foreclosure, it can be beneficial in other borrower-lender situations. If you are unable to make payments on credit cards, car loans or other major loans, the hardship letter is vital. The hardship letter is the first proactive step a borrower must take in the quest for cooperation and assistance from the lender. In the current economy, the most common situation is the borrower attempting to avoid foreclosure. Most of these borrowers are seeking a loan modification or a “short sale”. Most lenders require a hardship letter from the borrower.

Most borrowers do not know that a hardship letter is required to process an application for loan modification. Even those who do, often do not understand what the bank needs to see in this letter. The time and effort it takes to do a proper hardship letter will repay ...
... you with a successful loan modification that lets you keep your home. Even if you qualify, the hardship letter is necessary to prove that you do. It is like pleading your case in court. This document is essential to convince your bank that you are indeed suffering financial hardship. Writing this letter with the proper attention to detail proves to the bank that you deserve their serious consideration.

The importance of a well written hardship letter cannot be over-emphasized. Although it may seem basic, be sure to include your full name, address, lender’s name and your loan number. The letter should be concise. Your letter is not a top priority on the busy lender’s agenda. Be sure you provide a specific explanation for the arrearage, but do not whine and complain. As you describe the circumstances of your hardship, be sure to include the date the situation developed. You need to let the lender know if the hardship circumstance is temporary or permanent. Do everything you can to make the review of your request easy for the lender. Attach copies of documents that support your situation. For example, copies of bank statements those reflect a decrease in income or letters that support your inability to work because of a major medical condition. Anything that documents and supports your situation should be copied and included with the hardship letter. Provide the lender with your suggestion for a solution which, of course, is the outcome you are seeking. For example, “We feel that a loan modification (or short sale) would be beneficial to both of us.”

When you are able to write an effective loan modification hardship letter and correctly complete your financial statement, you increase your chances of being approved and receiving the help you need to keep your home. Only contact your lender when you have all the necessary information, to avoid slowing the process and hinder your success for being approved before you lose your home.

For essential tips and facts about how to get approved for a Loan modification. Many homeowners are not aware of the need to write a hardship letter as part of their home loan modification application.