A hardship letter is a brief note addressed to the mortgage lender or servicer explaining the reasons why the borrower has fallen behind on loan payments.  It is a necessary and central component of every loan modification package submitted to lenders.

Depending on the particular loan modification goals and objectives, this letter can be used to request an interest rate reduction, a waiver of imposed fees, or some other temporary solution to help the borrower get back on track while also avoiding foreclosure.  This is a simple document that explains what financial situation led to the delinquency of the mortgage as well as what the borrower is requesting from the lender in order to get the loan into current status.

Although mortgage lenders are getting more accustomed to receiving these letters from borrowers, attorneys and loan modification companies, it is still important to craft a letter that is brief as well as moving; borrowers should convey to lenders that:

 

Borrowers should include the reason for the financial issues, but should not compose a ten page appeal detailing every step of the misfortune that led to the financial problems. Brevity is key.  Convey as much information as possible without going into too much detail.  Borrowers need to realize that mortgage lenders must review every hardship letter that arrives at the office, and therefore they simply do not have time to read novellas sent by borrowers.

Start the letter by explaining the reason for the correspondence.  Borrowers don't need a flowery introduction but should instead get straight to the point.  Explain that the letter is a request for a rate modification based on your need for some assistance due to a hardship.  Tell the lender what the hardship is. 

 

A hardship letter does not magically make your financial problems go away, but it is instead a step in a bigger process.  If you make promises that you will no longer be late after the rate modification then keep your promise.  Don't make false statements that you can't back up with documentation.  For example, if you state that your spouse has died then you never know when the mortgage company might ask for a copy of the death certificate to put in your rate modification file.

The good news is that mortgage lenders want to avoid foreclosure if possible.  It's an expensive process and it would be much more profitable to allow you to keep the home if you become current on your loan.  

Date :