How To Write A Perfect Hardship Letter To Get A Loan Modification _
There are three things the banks are looking for in a successful hardship letter
, and the better you can express why you need the loan workout and what makes you a good candidate to receive a modification, the more likely you are to get the modification.
Sometimes following an outline is the best way to get your thoughts in order, and to be able to express yourself in a clear and concise way. Besides clarity, you should also strive to create a sense of empathy in your target audience, i.e., the lender. Below are three sections to think about when you are making your outline, and writing your letter.
First you should be upfront about the circumstances regarding your hardship. How did you get in this situation? You need to be honest and clear about how the current financial difficulty came to pass. For example, are you unable to make your payments because of an unexpected tragedy like losing your job or a sudden medical emergency? Have unexpected costs occurred from a recent death or divorce. Do changes in your finances, i.e., a lost job, also happen to coincide with interest rates resetting on your variable rate mortgage?
Second, you need to tell the lender about the timing surrounding these hardships. If you can show that your missed payments coincide with losing your job or having a medical emergency, you are more likely to gain empathy and understanding for your delinquency. Times are tough, and you want to show the bank that some external circumstance caused the problems in your finances, and that the missed payments were not due to laziness or mismanagement of your funds. If you have since regained employment, and started making payments again be sure to call this o the lender's attention. This shows that you are making a good faith effort, and are paying off your debt to the best of your abilities.
Finally, you need to clearly state what your new plan is to show that you are not going to fall behind again. This plan should include a family budget, and show that you really have thought about the money coming in and the money going back out to your creditors. You need to show that you will be able to maintain the new payments, especially if you are asking them to modify the terms of your loan, perhaps lowering the interest or principle that is due. The lender will not want to work out a modification, if they think you are likely to fall behind in the near future. Instead, they may choose to cut their losses. This third section, or "your plan", may be the most important step, so be sure you are clear and honest about your new plan.
This letter is your chance to tell why things went awry with your payments. Remember you want to be brief, but also inspire empathy. Lenders are human too, though it may sometimes seem like they are not. If they revise a payment plan with you then they make much more money over the course of the loan, than if they seize the property in foreclosure. You need to be compelling, without sounding to much like you are whining. You may also want to close with a few details about why your home is important to you perhaps including a particularly fond memory of being there. You could also talk about how much the community and neighborhood mean to your family, and how your family contributes to the local society. Outlining your hardship story, the timing of events, your good faith efforts, and your recovery plan, in concise, believable, and sympathetic language will help you write a compelling letter.
by: Chiral Mehta
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