If you are trying to obtain a loan modification or other loan workout plan, then your bank’s guidelines are going to require that you write a hardship letter.
A hardship letter is required by lenders when negotiating a loan modification or any loan workout. It is a letter you have to write explaining your financial distress and what caused you to fall behind in your mortgage payments.
When writing your hardship letter remember that lenders will not modify your loan because they feel sorry for you, but rather because you have convinced them that you will be able to make future payments under the proposed loan modification. As a result, while you need to specify your financial hardship, your letter should concentrate on how you plan to rectify your situation, rather than focusing on the causes of your financial distress and missed payments.
Make sure that when you write a hardship letter, you provide a specific cause for missing mortgage payments. Below are examples of acceptable hardships according to bank guidelines:
Hardship Letter Example: “In June of 2017, I lost my job. Over the months of July, August, and September I struggled to make my monthly payment, but still succeeded. When the interest rate increased on my adjustable rate loan, in spite of budgeting and cutting down on any unnecessary expenses, I was no longer able to make the mortgage payment…”
Hardship Letter Example: Request a fixed rate, lower interest rate, or an extension of the mortgage term for lower monthly payments.
While you can find hardship letter templates online, because of the nature of writing a loan modification hardship letter, you are better off to write it yourself. Make sure that you are clear and concise and explain to your lender your reasons for missed mortgage payments and that you offer a solution to your financial distress. If you include an acceptable hardship, you will most likely be considered for the loan workout plan that you are seeking.
(You may also be interested in: Top 5 Hardship Letter Mistakes)