Loan Modification is an optimal choice for struggling homeowners, especially if refinancing is not an option. One of the first steps in requesting a loan modification is submitting a hardship letter which outlines your financial situation and why you need help.
Designed to explain how you got into your current financial crisis (and what you intended to do to get out of it - and stay out), the hardship letter can sometimes be the only thing that sets you apart from the hundreds of other loan modification requests sitting on a reviewer's desk. That's why it is so important to learn how to write one that will get noticed.
Knowing the right ways (and wrong ways) to write a hardship letter can make a big difference in convincing a lender to modify your loan. Remember, they are doing you a favor by even considering your request, so be polite and agreeable. Don't gripe or complain in your letter, and don't be so overly dramatic that it turns the reviewer off. Instead, opt for a simple explanation that tells them your situation in a genuine voice.
Do your best to keep your letter at a reasonable length (less than two pages). The average mortgage lender these days may receive hundreds of these requests a week and simply doesn't have time to wade through pages and pages of explanations regarding why you find yourself behind in your payments. Respect their time and they'll be more wiling to help.
Besides, by now they've heard just about every story imaginable; and the odds are you aren't going to tell them anything new. Whatever excuse you can come up with probably won't elicit much sympathy, no matter how creative you think your approach. Honestly and humbleness truly is your best tactic right now.
The absolute best (and most productive) hardship letters are short and truthful. They avoid going into too much detail, opting instead for a simple explanation and resolution request. Saying something as simple as "due to the recent interest rate readjustment on my mortgage and decreased hours at my job, I'm finding it difficult to keep up with my new higher payments," may be all that's necessary to get what you want. Lenders know how tough it is right now and they don't need any lengthy explanations.
Still not completely sure how to write your own hardship letter? Here are a few simple guidelines to get you started: get started?
-While trying to keep your letter short, don't risk being too vague. Be sure to include all necessary information and documents such as medical receipts; death certificates; unemployment notices; etc.
-Write with some feeling and emotion.
-Identify the reasons for your failure to keep up with your monthly payments, including any DATES which coincide with the delinquency period.
-Tell your lender what you want: a lower interest rate; a longer loan term; etc. You may even want to list a proposed monthly mortgage amount that you know you can handle.
-Show a willingness to work out an equitable solution - never be confrontational
-Be polite: always thank the lender for his/her time and consideration.
-Include your current contact information.
-Enclose bank statements from the past two months, late notices on your car, last year's tax returns, and anything else you can find that can verify your financial state.
Of course there are a few things you should never put in a hardship letter, lest you risk turning the reviewer off:
-Details about your legal problems. The point of this letter is to make you look responsible, so don't give your lender any reasons to think that you aren't.
-Details of your impending divorce or other personal issues. If they are pertinent to your case, than only give the most basic information - and don't editorialize!
-Any reasons you are overextended other than those which are out of your control such as a job loss; illness; death; interest readjustment, etc. Otherwise you may look like an irresponsible spendthrift.
-The fact that you will claim bankruptcy if they don't approve your modification application. If they think they'll lose money on your loan anyway, they won't have any incentive to try and help you out.
-Any other threats of non payment. Banks don't respond well to threats, so don't even think of trying this approach.
The best solution is getting a do it yourself loan modification kit. One such kit is 60 Minute Loan Modification. It include a professional hardship letter outline that will catch your lenders attention, it also includes conversation between homeowners and representatives, so that you can hear what to say and more importantly what not to say. The kit will teach you all the needed vocabulary, and most importantly the kit was created by a person who modified five of his home loans, and numerous loans of his clients. Many people used this kit with success, and overall it's a great product.