Writing a Loan Modification Hardship Letter

A loan modification hardship letter is an integral part of the modification process. Hardship letters not only give borrowers the opportunity to explain their financial circumstances, they also provide an opportunity to connect with loss mitigators on a personal level.

When writing a loan modification hardship letter, borrowers should take time to carefully weigh their words. The letter should include a timeline of events leading to financial hardships and an explanation of steps taken to fix the problems. The most common hardships include lack of employment, chronic health problems, death of a spouse and divorce.

There is no exact science to writing debt hardship letters, but there are a few strategies that can be used to improve chances for success.

Regardless of how well the letter is written there is no guarantee of approval for a loan modification. However, borrowers should take advantage of the opportunity to connect to bank loss mitigators through the letter of hardship.

As a real estate investor, I have been able to talk directly with mortgage lenders, bank loss mitigators and real estate attorneys to obtain insider-secrets on writing hardship letters. One thing they all agree on is that handwritten letters are better received than typed letters. Perhaps this is because handwriting seems more personal.

With that being said, letters of hardship must be easy to read. Individuals with illegible handwriting should hire someone to handwrite the letter for them. If this is not an option, use a word processing program or typewriter. Typed letters can be just as effective as handwritten, as long as they contain pertinent information.

It is important to keep mortgage lender hardship letters succinct and to the point, yet provide ample information to help loss mitigators understand financial difficulties. Keep in mind loss mitigators are responsible for multiple types of real estate transactions including mortgage refinance, foreclosures, short sale transactions, and forbearance agreements. They do not have time to read lengthy letters.

Stick to relevant facts when writing the loan modification hardship letter. Provide details of your financial plan and how you intend to stay on course with future home loan payments. State measures taken to fix financial problems. If you have reduced expenses, explain how much money you have slashed from your monthly budget.

Homeowners needing to modify their home loan should consider applying for Making Home Affordable programs established in 2009. Home Affordable programs are available to borrowers who are current with home loan payments and have not been late by more than 30 days in the previous twelve months.

Borrowers must contact their lender to determine if they are a participating lender. Lenders offering loans guaranteed by Fannie Mae or Freddie Mac are required to participate in Home Affordable programs. Borrowers must submit loan modification applications before December 31, 2012.

Homeowners should take time to become familiar with available mortgage loan modification options to determine which strategy is best suited for their needs. In addition to loan modifications, banks might offer mortgage refinance, forbearance agreements, deed in lieu of foreclosure, or short sale agreements. By taking time to gather facts, homeowners can make an informed decision about their most valuable asset.

Program details are offered at MakingHomeAffordable.gov. Beware of services that charge fees to assist with filing MHA applications or writing loan modification hardship letters. MHA is available to all U.S. citizens at no cost. Homeowners can also obtain complimentary housing counseling through the Department of Housing and Urban Development.