Preparing & Writing A Hardship Letter for a Loan Modification

Without a real hardship the bank will not grant you a loan modification

While some applications have the necessary hardship information some banks will still ask for a Hardship Letter. The type of hardship you are experiencing will determine what you write in your hardship letter. Some banks will require supporting documentation but most of the time this is unnecessary because the hardship will be obvious, such as the loss of a job and therefore you have no paystubs or a reduction in income that will be shown in paystubs or on a profit and loss statement or tax returns. Outside of a loss of income the next most significant hardship is usually medical issues.

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writing a hardship letter for loan modification

Why Does the Bank Require a Hardship Letter?

Homeowners faced with writing a hardship letter to support your loan modification application often don’t know where to start; it can be daunting to know just what the banks are looking for. Under the HAMP program there is a hardship section where you can check off which type applies. This may allow you to avoid writing a detailed hardship letter, but it is a good idea to prepare one anyway because they may request it.

A Hardship Letter: Articulate, Compelling, Effectual

The hardship letter for a loan modification is an important document you’ll submit with your application. It describes in detail your financial situation and why you need assistance and what has caused you to fall behind with your mortgage payments. Writing in such a way that creates poignancy and states your unique situation is what can make one application stand apart from the others.

You need to understand what the bank is looking for from this letter and the best way to phrase the elements for your specific situation; highlighting your need for assistance and how you will be able to afford an adjusted plan. While it does take time to craft this letter it really can be the difference maker in your loan modification process.

As one of the key components to your loan modification process, making sure the hardship letter is well written and that it contains all the relevant information will give you a clear advantage in the assessment process. 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. You can get a rate reduction or have your rate fixed for a certain period of time by following the home modification plan and writing the best possbile hardship letter.

Provide in detail the hardship you have experienced. Loss of a job, reduction in income, significant rising expenses, mortgage rate adjustments and medical issues are some of the most common hardships. The financial meltdown and subsequent crash in the housing market have created tremendous hardships for borrowers. Detail dates on what happened. Ask for the bank’s help and let them know that things sre getting better and with an affordable loan modification you will be able to resume making regular monthly payments.


Every letter, document, form and enclosure required for a successful home modification needs to be researched and crafted with the same care as we’ve shown here for the Hardship Letter. The HomeTitan Modification ToolKit steps you through all the nuances and headache inducing details. Get access to our complete step by step loan modification toolbox. Total application assistance and instructions.
 
 

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The Structure of The Hardship Letter

The hardship letter provides a detailed description of the situation you are in supporting the reason why you can’t afford your loan. Be specific, whether it’s a medical issue, becoming a single parent, the loss of an earner, or a financial setback. We’ve outlined it below. Just follow the advice above and the structure below. The formal structure and getting the tone just right is essential for creating a letter with impact.

Hardship Details (Specific) + Business Formatting + Genuine Tone = SUCCESS
  • Letter Head
  • Date
  • Salutation
  • Brief Introduction of why you are writing this letter
  • The type of assistance you need
  • Explanation of the hardship; brief but not overlooking the salient points and events
  • Explanation of what caused you to fall behind.
  • Explanation of how you plan to resolve your situation; a convincing and realistic plan of action
  • Explanation of your current monetary situation, actions you’ve already taken towards alleviation, financial counseling, money you have set aside, if any.
  • If you expect to be working with an advocate, include his name and contact information; otherwise, include your contact information.
  • Briefly emphasizing your desire to prevent foreclosure, why you feel you will be successful, and your genuine commitment to your success

  • Sign
  • Loan Number
  • Your Address