Loan Modification Guidance: The Hardship Letter

The New York Times published an insightful article on Sunday that takes homeowners step-by-step through the process of writing an effective “hardship letter” to their lenders.

Borrowers – including those applying for a loan modification under the Making Home Affordable program – are often required to submit “hardship letters” that explain to their lender why they have missed their payments or are struggling with their mortgage. In the article, New York Times contributor Lisa Prevost lays out extremely helpful advice on what and what not to include in the letter, including that homeowners should stick to the facts and avoid being overly emotional.

In addition, we’ve compiled a short list of hardship letter tips from our team of housing counselors:

• Include the timeline: Be very specific regarding when the hardship occurred and how that has since impacted your financial situation.

• Describe what has been done to improve your situation: Mention what steps you have taken to attempt to get back on track after the hardship. Examples including eliminating cell phone or cable bills, or searching for a roommate to bring in extra income.

• Explain what you are hoping for: Describe the type of mortgage relief you are applying for (loan modification, refinance, etc.) and explain how it will help your situation (i.e. it will lower the mortgage payment by $500, which would make it affordable).

• State recent communications with servicer: It’s best to include what steps have already been taken with your servicer, including the last time you were in contact and what types of things were discussed. 

• Be truthful: Sharing incorrect information complicates the situation and can delay a resolution.

Most importantly, homeowners need to know that they don’t have to go through this process alone. HPF’s housing counselors, who are available by calling 888-995-HOPE (4673), will walk you through every step of your mortgage resolution process, from filling out the paperwork to writing the hardship letter. Our counselors even facilitate discussions between you and your lender by hosting a three-way phone call to discuss possible solutions. Having the support and guidance of an independent, third party expert can make all the difference when it comes to finding an alternative to foreclosure.