Although economic conditions are appearing to improve, we are still in the worst recession of the past 50 years. Many people are feeling the pain, and some are having trouble paying their mortgage on time. Foreclosures are happening at an astonishing rate, but many people are overlooking their options. Home loan modification is a viable solution, and a very important step to getting your loan modified is writing a hardship letter which will catch your lenders attention and explain your financial situation.
To get a home loan modified you need to inform your lender of your impending circumstances and provide with vital evidence of the same or show that you are in trouble. The Hardship Letter presents a brief but not vague explanation of your situation and how you plan to get out of it and staying out. If your Hardship Letter succeeds in presenting your situation to the lender in the right way, your chances for a loan modification will increase dramatically. Here are a few guidelines to keep in mind when writing your hardship letter.
1. You should make it as concise but not vague. Nobody wants to read more than two pages of explanation of a certain cause.
2. Hardship letter should include primary information about you and your lender: full name, complete address, the lender's name and loan number, medical receipts, death certificates, unemployment notices; etc.
3. Write with enough emotion and feeling so that your lender can understand you personally.
4. Reasons should be well defined and may imply a certain, and effective cause of not being able to keep up with the mortgage payments. Stop making excuses in the letter and state your real intention and a valid reason for modifying the loan. It can be a recent separation with a partner, loss of a job or partner, unemployment, or death in the family.
5. Because it is not always the lender that has to read through the Hardship Letter, start with a vague greeting like "To Whom It May Concern".
6. Tell your lender want you want: lower interest rate, longer term; etc. You may even consider giving an amount you will be able to pay.
7. Be polite, lenders are not legally mandated to modify your loan.
8. Closing signatures should include your signatures and the co-borrowers signatures under the closing term "Sincerely". Dating the letter is a must to keep track of the correspondence.
Here are some things you should not include in your hardship letter, so that you diminish your chances for a modification.
- Details about your legal problems. Don't make yourself look irresponsible.
- Don't go too much in to detail about your personal life like court cases, arrests; etc.
- Don't write of expensive purchases, don't make yourself look like a irresponsible spendthrift
- DON'T THREATEN THE LENDER, they don't respond well.
Hardship Letters can help you with one of the two things: they can either be sent as a request to the lender to short sell your house or they can be addressed to your lender to consider the restructuring your present loan. The latter is where it is the most effective. Remember to keep the letter short while still explaining your circumstances in as much detail as possible. Also, you have to be precise and clear of your objectives and be informative. Providing a short summary after the main body detailing the finer points can be a good way of going about having your Hardship Letter considered. Finally try to be humble and thankful in your tone. The person reading the letter has to take the ultimate decision of providing you with the option and if he doesn't like your tone, you might just forget it and foreclose your home.