Defining a Hardship Letter for Mortgage Loan Modification

Writing a hardship letter can prove difficult for some. Putting the facts of a serious personal situation such as the inability to pay one's mortgage in writing can be somewhat stressful. However, it is a necessary and vital part of the application process for procuring approval on a home loan modification plan. On a basic level, it helps maintain the integrity of the entire program.

The opportunity to apply for a loan modification program is certainly one of the best opportunities afforded to those who are distressed borrowers. For those not familiar with what the process of loan modification entails, this is a program for those that may be experiencing the extremely unfortunate scenario of an impending foreclosure. Specifically, a loan modification program alters the original terms of the loan so that the borrower can make timely payments once again.

Of course, there will be certain qualifications one must meet in order to be approved for the loan modification process. This is a program intended only for those that are unable to pay their mortgages. It is never a program intended for those that would prefer the mere convenience of altering a loan. This means there must be an established method for documenting whether on not the applicant is truly facing a seriously negative financial situation. This documentation comes in the form of a hardship letter.

What exactly is a hardship letter? Basically, it is a letter to the lender that presents clear and specific information regarding the circumstances that led to the financial hardship. Those hardships that are considered serious would be a loss of employment or income; severe medical bills; a significant increase in living expense has been incurred; the minimum monthly debt payments to all lenders is excessive; and your liquid cash reserves are high limited among other serious financial problems.

However, regardless of how serious your financial situation is, the severity of the situation will be lost if the hardship letter is not conveyed in a clear manner. In other words, the letter itself must be as specific and as easy to understand as possible.

This is the most important aspect of the hardship letter: the letter must clearly and explicitly state you are in difficult financial shape and that you are formally requesting a loan modification program. Hardship letters are generally brief, to the point, and present expositional statements that are clearly understood.

Remember, the person that is reviewing the letter cannot fill in any blanks if there is a lack of clarity in the hardship letter. More than likely, they will outright reject the application which will require you to apply again. This could lead to losing a lot of valuable time and when the specter of foreclosure is looming, time is not something that should be wasted. One way to make sure the utmost consideration is given to the hardship letter involves enclosing supporting documentation with the letter.

One common item that will help the cause would be the inclusion of a detailed budgetary breakdown. In this breakdown, you would note your income along with your expenses and debts. If said breakdown accurately shows that you are well into the red, the statement will help support the hardship letter. Be sure to note in the letter that these items are included and for those reviewing the loan modification applications to please examine the documentation.

For those that may be struggling to produce a concise and clear hardship letter, it may be best to turn over the writing duties to someone that understands exactly how to compose the letter. Finding a freelance writer to compose the letter could prove helpful. The best hardship letters, however, will not be produced by freelance writers. They will be produced by people with a background in contract law. That means it would be best to procure the services of an attorney that handles loan modification services to compose the hardship letter. Actually, procuring the services of such an attorney to handle the entire loan modification process would be a wise idea as well.