The main purpose of a loan modification hardship letter is to convince your lender that you will be able to pay your monthly mortgage payment on time in the future if they modify your loan.
Basically, your lender has to make a calculated decision based on your current financial and employment status to determine if you will be a good candidate for a loan modification.
While the “Hardships” that may have contributed to your unique scenario are important to include in this letter, it is essential to focus on the positive aspects that will secure a mutually beneficial relationship between you and your lender.
_________________________
This outline will help you structure an acceptable hardship letter:
Lender
Address
Phone
Homeowner Info
Mailing Address
Contact Numbers
Loan Numbers
RE: Subject property address
Intro -
Describe the type of outcome you are seeking from the lender and why it is important for you to keep your home.
Reason for the Hardship -
A brief explanation about the circumstances that lead to your decision to seek a loan modification. Whether it is an increase in rate or payment due to an ARM, a reduced income, illness or death in the family, or a combination of factors, just lay out the facts.
This is not an attempt to gain sympathy, it is simply meant to communicate with the lender so that they have a better understanding of your story.
*Depending on your specific scenario, it may be acceptable to include proof of any blatant lender violations that ultimately contributed to your hardship.
Transitioning into the income and employment portion of the letter, explain to the lender your game plan for paying a desire mortgage payment on time.
Income / Employment -
Verifiable income, employment stability and current monthly liabilities are the main things a lender analyzes in the loan modification process.
As a general rule of thumb, lenders like to see your new mortgage payment at 31% of the total gross monthly income that can be verified on paper.
* EX: How To Determine 31% DTI
An explanation about your work history, expected earnings, and expected job security always helps.
Monthly Budget -
Another important factor to pay close attention to is your monthly budget.
If your lender sees that certain luxuries such as cable, entertainment, non-work related travel, or dining out expenses have not already been eliminated from your life, then they may feel that you are not serious about saving money.
Highlight any details of the attached budget worksheet that the lender may question. For example, special schooling, child care, medical bills, employment related expenses, travel…
Representation -
Include the contact information and release giving permission to your loan modification team to speak to your lender on your behalf.
*Remember, your lender is a debt collection company and may use anything you say or do in a manner that strengthens their position against you.
Related Articles
- What Is A Loan Modification?
- Do I Qualify For The Obama Making Home Affordable Modification?
- How Much Will My Payment Decrease With A Loan Modification?
- Will A Loan Modification Affect My Credit?
- Getting Approved For A Loan Modification – It’s All In The Packaging
- Required Documents For A Loan Modification
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