Hardship Letter -
Do you know how to write
effective hardship letters? It's been proven that a
well-written hardship letter will make a positive impact on the
approval of your mortgage loan modification application.
Follow the outline below in order to increase
your chances of getting approved.
The Three S's: Setback, Struggle, Solution
Your bank's loss mitigation representatives are more than likely
overworked, overwhelmed, and underpaid. So the easier you
make their job, the better it is for you. One of the ways you
can do this is by writing your hardship letter in such a way that gives
them the correct information in an organized and succint fashion.
The main ingredients they are looking for in your letter are:
the setback, the struggle, and the solution.
The lender wants to know what happened in your life that led you to
stop making your payments. Your written description has to
make sense and it must be consistent with the financial documents (bank
statements, paystubs, etc)that you are required to submit
for their review. Make sure you include the following under
your setback explanation.
- What happened?
Did you lose your job, have unexpected health issues,
divorce, suffer a
paycut, death in the family, etc.
- When did your
setback start? Did you make an attempt to keep
things going and used your reserves and other resources until you've
- It's also helpful to quantify
how much your income has been reduced.
This is the part in your hardship letter where you describe to your
lender the measures you've taken to remedy your situation.
- If you've suffered an income loss, have you cut back on
your household and personal expenses in order to try to make your
mortgage payments? Make sure you let your lender know that
you've reduced your expenses in every way you possibly could and that
you have not made any frivolous purchases while suffering your setback.
- In addition to having made major reduction in your
expenses, also let the lender know if you've made an attempt to
increase your income by taking on a second job, or any freelance work
to help make ends meet.
How do you plan to recover from your setback? Your lender
will want to read in your hardship letter that you have made a good
effort to come up with a viable plan to get back on your feet so that
if they grant you a loan modification approval, you will be able to pay
your mortgage loan in a timely manner every month.
If you give any reason for your lender to doubt your ability to recover
at all , your loan modification may be denied.
- What steps are you taking to increase your income in the
future? Are you looking for a new employment? a second job?
- If your hours have been cut at work, do you anticipate them
to be increased in the future? When?
- Do you plan to rent out some rooms in your home to get
- If your spouse is not working, will he/she be looking for a
- If you are experiencing health issues, when will you
- Also, state how much you would like your mortgage payments
reduced to make it affordable with your current level of income.
Mortgage Loan Modification
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