Top Two Ways to Write a Loan Modification Hardship Letter

by tammy on April 8, 2010

The loan modification hardship letter is one of the most important parts of the loan modification process. Making common mistakes during this part of the process can make the all important difference between getting the loan modification and not getting it. Though there is no “right” way to write this difficult but important letter, there are a couple of strategies that usually bode well with lenders and continually achieve desired results. Above all, borrowers should remember that this letter is a business letter, not a personal one, and should be written as such.

First of all, though it may seem counterintuitive, successful loan modification hardship letters are not pleas. They are also not detailed outlines, complete with cries for sympathy, of all the difficulties one is facing in his or her life. To put it crudely, everyone is facing hardships, and most lenders will not care enough or have enough time to differentiate the needs and struggles of one individual from another. One should not go on and on about being a single parent or being afraid to live on the streets or anything else. Instead , the letter should professionally and curtly, without pathos, address the legitimate and documented reasons why one has been unable to meet the terms of the original loan agreement. Aside from this, the letter should also detail how exactly the loan modification process would keep the borrower from getting behind on his or her payments again. Requests for payment adjustments should be kept reasonable and simple, and there should always be some verifiable proof that this is the absolute most the borrower can afford to pay. In many cases, hiring a lawyer or other professional to write or at least look over this letter can be very beneficial. These individuals can provide invaluable insight into problems or issues with the letter and its chances of actually achieving the overall goal of a loan modification.

Secondly, many borrowers also make the mistake of making their loan modification hardship letters much too long. A good letter will get straight to the point quickly. Borrowers should understand what constitutes a valid inability to meet the terms of the loan agreement and should reference any of these that apply to their individual situations quickly. These include having lost a job, receiving a reduction in one’s income, the homeowner passing away, the spouse or close family member of the homeowner pass away, a verifiable illness being experienced by the homeowner, a divorce, a separation, a forced job relocation, an adjustable rate reset-payment shock, or an increase in necessary expenses. Outside of these, no other “hardships” should be mentioned in the letter. The letter should never be longer than two pages in length and should carefully explain the hardship, the steps taken up to this point to rectify the situation, a responsible and well thought out plan to get back on track, and proof that the borrower will be able to stay on track.

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