Loan Modification Hardship Letters - Three Essential Components

If you are seeking loan modification as a means to assist you with your current financial difficulties in meeting your monthly mortgage obligations, you're going to be writing a hardship letter as part of that process. Many Americans are struggling with debt due to the downturn in our economy and it's important to let your lender know about your situation before it gets too far out of control. One of the best tools associated with the loan modification application process is the hardship letter which explains your situation to your lender.

Below are some points to follow when composing your loan modification letter. It's good to use these guidelines as a map so that your letter stays organized and you cover the most salient points that your lender is interested in reviewing in consideration of your request to modify your home loan.

Component #1 - Start at the beginning by explaining to your lender what has happened that has caused you financial difficulties. If situations such as job loss, divorce, accident, or illness have put you in your current situation, be sure to explain that. The bank needs to understand what has happened that has led you to seek loan modification.

Component #2 - Demonstrate to your lender that you were never delinquent with payments or in financial crisis until the circumstances you'referenced above occurred. If you're still current with your payments but expect to soon start having trouble, explain that to your bank so that they'll know you're being proactive in trying to remedy your situation.

Component #3 - Tell your bank what you plan to do to make things better. Share with them your proposed budget, any plans you have for cost savings, etc. The bank wants to know that you are a conscientious homeowner who is committed to improve your situation and keep your family in your home.

The hardship letter is the only opportunity you're going to get to explain how your financial situation is affecting you and your family, so take the time to do it right. Review it or get someone else to proofread it carefully before you submit it. This is not an area that you want to shortcut as part of your loan modification application.