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HOW TO WRITE A HARDSHIP LETTER Loan Workout, Loan Modification, Refinance
A Hardship Letter is one of the documents that should be included on the negotiation with your lender for a lower loan payment and/or rate.
It is commonly used in order to avoid foreclosure, get a loan workout, modification, refinance or to apply for a short sale program.
Additional information that generally will need to accompany a letter of hardship:
Latest income tax return.
Gross monthly income (documented evidence of earnings, recent pay stub(s), Welfare, Social Security.)
Any collateral or valuable assets
The amount you owe, including credit card monthly payments, car loans or other debts.
Any second mortgage on the property
A hardship letter can help you:
Save your home by stopping the foreclosure process
Reduce the principal balance
Lower your payment
Lower the interest rate and payment
Remove all or most of your charges and late fees
Convert the loan from adjustable rate to fixed rate
Get the lender to forgive missed payments
When writing your letter:
Tell the truth and keep it to the point
Keep it short (1 page is ideal)
Explain how a circumstance beyond your control made you default
Mention the efforts you've made to keep afloat
Indicate the extra jobs you are working on in order to make ends meet
Make the reader feel a connection on a personal level
Make it professional (the right format, offer solutions for the issue)
Good reasons:Illness in the family, Medical Bills, Job Loss, Failed Business, Reduced Income, Death of Co-Borrower or Death of Spouse, Death in the family, Military Duty, Damage to Property (natural disaster or unnatural), Other (Specify).
Serious Illnesses such as cancer are considered Medical Hardships.
You can either take matters into your own hands and try to solve your mortgage problems by calling the servicer's Loan Resolution Department or the Early Intervention Department and negotiating on your own or;
Hire an attorney or loss mitigation company to represent you in negotiations with your lender. This can cost anything from $900 to $3000 or more.
It is commonly used in order to avoid foreclosure, get a loan workout, modification, refinance or to apply for a short sale program.