Writing a Hardship Letter for Your Loan Modification Application

If you haven’t yet applied for a loan modification to help lower your mortgage payment and aren’t sure where to start, here are some tips on how to get started and how to write that hardship letter.

What is a difficulty card? A hardship letter is a letter that explains why you didn’t make your mortgage payments, what event happened that may have caused you to be late or not make any payments. The hardship letter will need to match the first payment you missed and a valid reason why. For example, if you lost your job, had a reduction in wages, or lost income due to a spouse or death. It is important to make sure that the timeline in which it was delayed matches the event that occurred. Lenders have been watching these letters closely, as some homeowners actually made up events.

What if I didn’t have a job loss or loss of income, but did have an increase in monthly expenses, due to a sick parent or a new child? Would these events prohibit me from applying for assistance? In fact, on the government’s Making Home Affordable website you’ll find a list of valid reasons lenders will accept as a hardship.

So once you’ve written your hardship letter, which should be no more than one page, what do you do next?

All lenders will require the RMA request for modification affidavit or some type of loan modification request form from the lender. Some lenders have specific forms; You’ll want to check your lender’s website to see if they use different forms. The process for a loan modification application to modify your home mortgage is very similar to refinancing. You will need to provide income documents (ie pay stubs, rental income, social security, etc.). Bank statements to document income and expenses, you will also need to provide your monthly expenses (ie food, utilities, etc.). You’ll want to take a look at your credit report because lenders will pull one to check your monthly obligations. Once you have collected all of this information, the lender will ask you to fax copies or you can mail them, but that may take longer to process. As your loan modification is processed, you must continue to make your mortgage payments. If for some reason you can’t make any payments, you should still try to set aside some money that could be used for a down payment or a good faith payment in case the lender can’t qualify you for assistance. Once you submit your loan modification application, it is important that you follow up with the lender and stay in contact with them. Often time borrowers will be denied simply because they submitted it on the application and as the popular statement goes, the “set it and forget it” attitude will get you denied. For more information and tips on working with your lender, you can bookmark popular blogs and forums.