Loan Modification Hardship Letter

A Loan Modification Hardship Letter will paint a picture of your family’s current financial position.  The federal stimulus plan requires that you be facing a hardship situation in order to be eligible to apply for a loan workout.  This very aggressive program features interest rates as low as 2%, loan terms up to 40 years, and in some cases part of your principal balance may be deferred or forgiven to help you stay in your home.

Your hardship letter should describe your financial dilemma to your lending institution, explain the reason you need a loan modification, and show them that this is the help you need to keep repaying their loan. The lender must see that you are determined to keep your home, and that this take top priority in your financial affairs.

The hardship letter is a homeowner’s explanation to the lender why they have defaulted or may soon default on their loan. A good hardship letter will encompass the entire chain of events leading up to the event that necessitated writing the letter. The letter also needs to let the lender know if the situation is temporary or longer term and what the borrower plans to do about the situation.

Usually a lender asks last years W-2 or tax return as well as the most recent paystubs (last 2 is common). In most cases it is also necessary to provide details about your monthly expenses to paint the financial picture that will help the lender to make a decision. List all expenses you have. Don’t hold back, it will help to know what you spend and where you may be able to save expenses to afford a new payment proposed by the lender.

Given the right resources, most homeowners can talk with their lender directly about a loan modification. The basis for this conversation usually comes down to a well written and to the point hardship letter. I have put together a sample hardship letter to help those in this situation. You can also take a look at this group, they have a loan modification package that gives you the proper resources to do it yourself. Again, with the proper resources and commitment, you should not fear talking with your lender about a loan modification.

You can get the help you need to apply and qualify for a loan modification by ordering and downloading the best selling handbook for homeowners, The Complete Loan Modification Guide. This is a low cost, easy to read home edition loan mod kit that will provide you with everything you need to prepare a professional and acceptable loan modification application. You are provided with all of the necessary forms and given detailed directions on how to complete them properly.