Don’t write that loan modification hardship letter until you learn the best way to explain your circumstances and gain your lender’s empathy and most importantly, their cooperation. The key reason to qualify for a loan mod is because you are suffering a financial hardship situation, and this is making your current mortgage payment unaffordable. The only way your lender will understand your circumstances is for you to write a brief but compelling description and include it in your application. Here are some good and bad hardship letter examples from homeowners that may help you to write your own.
Hardship Letter for Loan Modification – Good Example:
I am writing this letter to explain my current financial hardship situation and to request consideration for the Home Affordable Modification Plan or any other loan modification program I may qualify for. My income has been reduced due to my employer cutting my hours at work. The bad economy has affected the business and so my employer has had to reduce the payroll. I have looked for a second job but I have not been able to find anything yet. My family has cut out all unnecessary expenses but we are still not able to make ends meet. Each month we have had to draw from out small savings to be able to pay our bills, but now that is almost completely gone. We have had to use our credit cards to pay for basic living expenses.
We have no other option but to request your help and modify the terms of our home loan to a more affordable monthly payment. We are hard working, responsible people but through no fault of our own we are facing the possibility of losing our home. We would sincerely appreciate your help and are respectfully requesting consideration for HAMP and a low, affordable mortgage payment so that we do not lose our family’s home.
Hardship Letter for Loan Modification – Bad Example:
I would like to get approved for a loan modification to lower my interest rate on my mortgage loan. It is just too high and the current interest rates are much lower than what I currently have. My neighbor just got a loan mod and his rate is only 2% – I would like that rate too. My home is not worth what I owe on it, and I could just walk away but I think it would be in your best interest to help me stay here and keep making payments. I am requesting that you lower my loan balance so that it equals the current value. I put a lot of money down and it makes me really upset that I lost it all. The bank would lose a lot of money if they foreclosed on me, and so I think it just makes sense to lower my interest rate and reduce the loan balance to encourage me to keep my home.
It is not fair that people who don’t pay their mortgage get a lower interest rate than people like me who keep paying. You banks got a lot of money from the government and that is my tax dollars, so you should help me too.
TIPS to Write an Effective Hardship Letter for Loan Modification:
Remember that you are asking your bank to lose money, and that is not something they will do easily. It is up to you as the homeowner to prove to them that you are a qualified loan mod candidate by providing them with a legitimate financial hardship situation explanation. This is where a well written letter is so important.
- Be humble and don’t make demands, politely ask for their help
- Briefly explained what has happened to cause the hardship and provide an explanation of what you have done to try to improve the situation
- Specifically request HAMP – every borrower who asks to be considered will be reviewed for this beneficial government loan mod program
A well written hardship letter will help gain your lender’s empathy and cooperation – it is well worth taking your time to include the three critical items that they are looking for in the letter. You can get more tips and a letter template if you need more assistance.