A financial hardship letter is a written communication to the bank or lender that a borrower has had a change in their life financially and will need to adjust their monthly payment.  There are many reasons why  homeowners fall behind on their mortgage payments and in order for your bank or lender(s) to begin looking at a short sale or loan modification option, you need to prove a financial hardship letter. Obviously every homeowner has a unique explanation of “why” they are in their current situation.

A hardship letter is addressed to the lender, bank or mortgage company by the borrower once he/she has missed some of the payments. This letter serves as the basis for communication & future negotiations with the lender or the mortgage company.

Writing a hardship letter that is effective requires you to be very personal and include reasons why you have become delinquent in your mortgage loan payment. The reasons need to be legitimate such as long-term medical issues, job loss, family death, natural “act of god” disasters, etc.  All of these explanations are legitimate, rational, and reasonable explanations for being late on your mortgage payments, and are perfect foundations for a hardship letter.

You can also mention other circumstances too such as having two mortgage payments due to relocation, starting a new lower paying job or a critical health problem accompanied by high medical bills. Whatever reason you include just remember it must be a legitimate reason.  You may be asked to produce documentation to back up your story.

Start by creating a time line of the events which led to your inability to pay the mortgage. Then, write out a detailed description of these events and how they affected you.  If you can strike an emotional cord with them in your hardship letter , you’ll have a much better chance of having your offer accepted.  Demonstrate to your mortgage lender that although you may have fallen on financial hard times, that you are responsible and attempting to meet your monthly obligations.

The hardship letter must prove to them that the situation that caused you to fall behind was/is “temporary” and that you are now in a position to make your a lower NEW mortgage payment on time.  Keep in mind that the lenders really want to see why you have fallen behind with your mortgage payments. It should be clear, honest, and contain just the right amount of detail for them to make a decision about your particular situation.

This entry was posted on Thursday, March 26th, 2009 at 6:02 pm and is filed under Loan Modification. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.