How to Write a Financial Hardship Letter?

Financial-Hardship-LetterA financial hardship is a letter that is written to a creditor by explaining the financial trouble that you are facing and requesting to provide you with some kind of specific solution depending on the specific situation that you are involved. There are many kinds of situations in which you are demanded to write a financial hardship letter. There are two of the most common situations nowadays;

  1. To request to the mortgage holder to let you short sale your house; or
  2. Request to your credit card company to strengthen or restructure your account

When you apply for a mortgage modification then there are many key points for the loan modification but one of the key point for loan modification is the hardship letter that explains the reasons that why you are making the request for loan modification. To write an effective and complete request for a loan modification, it is necessary to learn the proper format and ingredients of the hardship letter. Here are some of the most important guidelines to write a hardship letter.

  • Beginning the hardship letter: – Before writing an effective hardship letter you should always contact to the loss mitigation department of your lender, which evaluates and processes the request of mortgage modification. You have to speak with someone in the loss mitigation department and acquire the correct spelling of his/her name, the address and direct phone number and extension. This information will help you a lot when addressing the letter.

When addressing the letter you have to place the name of the lender on the first lien, the department name in the second line and the person name to which you are writing on the third line. The next two lines include the mailing address. After that, you have to skip the two lines and date the letter. Moving ahead skip two lines more and write the name of the person.

  • Writing the body of the hardship letter: – In the first paragraph of the hardship letter you have to mention the request of a loan modification. Then explain the current financial hardship that causes you to make a request for a loan modification. The most common reasons for a loan modification include;
    • Job loss or decrease in income
    • Illness
    • Death of the primary earner of home
    • An adjustable rate that has increased your payment to an unaffordable level.

In the second paragraph of the hardship letter, you have to suggest solutions. Most lenders do not allow mortgage modifications easily, so in a result those borrowers who present workable solutions allowing them to keep making their payments are more likely to receive the mortgage loan modification. You have to mention that which terms of the mortgage you want chang.

The third paragraph of the hardship letter body lists those steps that you have taken to solve the problem on your own before requesting a loan modification. You have to mention that whether you have tried to refinance the mortgage, but you did not qualify. You have to briefly describe the search of your job and whatever is relevant. If you have requested to a real estate attorney then you have to include the contact information and the advice that attorney gave you.

  • Wrapping up the hardship letter: – You have to clarify in your hardship letter that you will wait for the response of the lender and also include the contact information such as your phone number and e-mail address. If the loan is in the names of two people then each of the borrowers should sign and date the letter. You have a chance to improve your chances of getting your request approved by writing a concise, well-thought and planned hardship letter.
  • Keep your hardship letter short: – Always remember to keep your financial hardship letter short and to the point. You should try that it does not exceed one page. A long and diverge letter will let down the nature of your case and will lose the reader.
  • Make it personal: – You should make sure that you personalize your letter as much as possible by including details about you and your family that will get the reader to identify your situation as a fellow human being.
  • State the problem clearly: – In the start of your hardship letter you have to summarize the specific situation that has induced you to write a letter. Remember to provide more details about you in later paragraphs of the letter.
  • Give enough information: – Your hardship letter should provide enough information about the financial situation so that the reader can easily understand your situation. Remember to attach clarifying documents as necessary that include; cash fellow statements, bank statements, income tax statements, invoices, letters etc.
  • Be humble and thankful: – The basic purpose of writing a financial hardship means that you are in deep financial trouble and this is basically a last option for you. So be aware to get into any blame games. Be respectful and thank the addressee in advance for considering your situation.