A big part of the loan modification approval process is explaining to your lender why you can no longer afford your home and why they should help you out. You will be asked to sign a Hardship Affidavit as part of the RMA application form, but you will also need to write a separate hardship letter explaining in detail what has occurred to place you at risk of default. Here are some easy, effective tips to help you write a Hardship Letter that will gain your lender’s cooperation.
- Keep it short but include some details-remember that your bank does not have time to read a small novel-anything over 1-2 pages is not going to help you prove your hardship. The bank will be more likely to read your entire letter if you keep it short.
- Put a heading on the letter – “Explanation of Financial Hardship and Request for Loan Modification”. Then write your loan number, borrowers names and property address on the top left side.
- Give details about when your hardship began and why-for example “I lost my job in April 2012 and was out of work for 3 months” or “My wife was diagnosed with a life threatening illness and we had unexpected medical bills”.
- Make sure that your hardship reason falls with one or more of the general accepted situations. Loss or reduction of income, high monthly debts, lack of reserves (savings) and increased expenses are the 4 acceptable categories. One or all of these may apply to your situation
- It is a good idea to begin each paragraph with one of the accepted reasons, and provide a brief explanation of the reason in that paragraph, “My income has been reduced because my boss cut my hours at work. This has caused my income to drop over 25%, making it difficult to afford my mortgage payment, etc”
- Be sure to have all borrowers sign and date the letter at the bottom. Include this letter with your RMA application form and proof of income that you send to your lender.
The loan modification hardship letter is one part of the entire application process, you must also provide a detailed breakdown of your monthly budget figures-income, expenses and assets. Be sure your that you report the acceptable
amount of income and expenses on your RMA form-if you need help to figure this out you can use the Loan Mod Calculator. This program will automatically compute and display your own specific budget requirements for you.
For more free tips and information visit MyLoanModificationCenter.com and visit the blogs.