One of the basic requirements to qualify for a loan modification is being able to demonstrate to your lender that you are facing a financial hardship situation.
You must be able to convince your bank that due to circumstances out of your control you need their help to get a lower mortgage payment.
A hardship letter is your chance to explain what has happened and why you need and deserve a mortgage modification.
Here is an example of an effective letter to help you compose your own.
Date Lender name & address Your name, address and loan # I am writing this letter to explain what has caused my financial difficulty and to ask for a loan modification so I can afford to stay in my home.
My family does not want to lose our home and we are willing to do whatever it takes to save our home.
The reason we first became delinquent on our payments was due to my husband being laid off his job of 5 years.
He was out of work for 4 months, and during that time we had to use our savings to pay our bills and buy groceries.
We cut back on all of our expenses just to try to make ends meet.
We have gone through all of our savings and are using our credit cards to pay for bills and living expenses.
My husband just started a new job and although the pay is a little less than he earned before, we have made the necessary adjustments to our budget and with a modified loan payment we will be able to pay our bills each month.
We are requesting a loan modification to lower our interest rate so we can afford to stay in our home.
The value of our home has gone down so much that we cannot refinance or sell, and a loan workout is our only option.
We would like to be considered for President Obama's Home Affordable plan or any other program that we qualify for.
We are responsible hardworking homeowners and we do not want to lose our family's home.
Please review our application and consider us for a rate reduction to 2% for 40 years.
Thank you so much for your help and we are anxiously waiting for your response.
Respectfully, Your name Obviously, you need to personalize the letter and detail your own unique circumstances.
The key is to be brief but descriptive, give a few details and try to gain the empathy of your lender.
You will also need to demonstrate the ability to pay the new modified payments by submitting a budget that details your income and expenses.
This form will show the bank in black and white that you will be able to afford the new mortgage payment and have a little money left over for emergencies each month.
When you know how to write an effective loan modification hardship letter and complete your financial statement correctly, you will have a very good chance at getting a loan modification so you can afford to stay in your home.
Don't contact your lender until your are prepared and have your paperwork ready.
You don't want to say or do something wrong and miss this one-time chance to save your home.