What to Include in a Hardship Letter When Applying for a Loan Modification

During the loan modification process, there is a good chance that you will have to write a hardship letter to your lender. A hardship letter is a letter that is designed to convince the lender of the rough circumstances that you have been subjected to. The point of the letter is ultimately to keep your house. While most people understand the basic idea of writing a hardship letter, they do not know what to include. Here are a few things that you will want to keep in mind when writing a hardship letter for your loan modification.

Bad Luck

While the subject of luck is not usually discussed in the financial world, you want to use it to your advantage when writing a hardship letter. You want to do your best to convince your lender that the thing that caused you to miss your payments was bad luck. The circumstances that led to your eventual default on the mortgage were beyond your control. The last thing that you want to do is tell them that you just didn't feel like paying the mortgage. You do not want to tell them that you went out and bought a boat six months ago and it stretched you too thin. Tell them about all of the bad luck that has happened to you along the way. 


When you are writing your hardship letter to the lender, you need to include as many details as possible. Make the details vivid and real for the person that reads the letter. Do your best to convey exactly what went on that led you into financial trouble. Most financial hardships start out with some catastrophic event that was beyond your control. Either someone has unbelievably high medical bills or a divorce rips apart the family. Regardless of what actually happened, you need to convey it to the bank in a very detailed manner. 

When you use vague generalities, there is no reason to approve your request for a loan modification over anyone else. They will want to know everything that led up to your problems. You can convey this only by using a great deal of detail along the way.

Be Direct

Despite the hard troubles that you have been through, make sure that they understand that they will not happen again. Be direct and confident that the worst is behind you. If you beat around the bush and make them think that you are not a solid person, they will feel less confident about helping you. You want them to be under the impression that they can trust you again. If they feel good about your situation afterwards, they will be much more likely to go through with the loan modification process. 

Ask them directly to approve your request and let them know what it would do for you and your family. You cannot afford to be vague in your request with this. The purpose in writing this letter is to keep your house. Therefore, you should take it very seriously.