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Loan Modification Hardship Letter

Mortgage lenders utilize a loan modification hardship letter to allow borrowers the opportunity to explain events which are causing financial hardship. While loan modification approval is based primarily on borrowers' ability to pay future payments, along with other financial factors, the letter of hardship can help borrowers connect to lenders' emotional side.

Taking time to craft a well-written loan modification hardship letter can go a long way in persuading mortgage lenders. It also allows borrowers to do a bit of soul searching to determine where things fell apart and can provide insight on how to fix financial problems.

Every loan modification is handled through the servicing lender's loss mitigation department. This division consists of employees referred to as loss mitigators whose primary job is to help borrowers devise a repayment plan which will be acceptable to the bank.

In addition to handling loan modifications, loss mitigators are also responsible for handling short sale requests and deed in lieu of foreclosure transactions. Considering the number of foreclosures, it is easy to see that loss mitigators carry a heavy workload.

The number one rule of working with bank loss mitigation is to remember that loss mitigators are human beings. While the loan modification process can be stressful, it is crucial for borrowers to be polite and considerate when speaking to their assigned loss mitigator. As the saying goes, you can catch more flies with honey. Be nice, be patient, and present requested information in a timely fashion.

Over the past few years, I have assisted nearly 400 borrowers in obtaining short sale approval. In my book, Short Sale Hardship Letter eBook Course, I present detailed information on the process of writing a persuasive letter of hardship. This information was derived by talking with loss mitigators, mortgage lenders and real estate attorneys.

Writing a loss mitigation hardship letter is essentially the same for loan modifications, mortgage refinance and short sale requests. The primary difference is the verbiage used. All types of debt hardship letters should be written using a business format. The borrower's name and address is included in the upper left side of the page. The lender's name, loss mitigator's name, and lending institution address is located on the left side of the page.

The body of financial hardship letters is where borrowers explain the circumstances that led to their need to obtain a modified home loan. Common problems include loss of employment, chronic health problems, divorce, death of a spouse, job relocation, military duty deployment, and incarceration.

The hardship letter for loan modification should close with borrowers' signatures and contact information. If you prefer a visual aide, feel free to view the hardship letter sample article I published last year.

Without giving away all the secrets provided in the Short Sale eBook, I will share two very important tips for how to write a hardship letter for loan modification. The first is to handwrite the letter of hardship whenever possible. The second tip is to keep the hardship letter concise and succinct.

Loss mitigators are very busy and do not have time to hear every detail of your life. Create an outline of events that led to your financial hardship and stick to the facts. Remember that a human being will be reading your letter so write from your heart and keep it real.

We invite you to learn more about working with loss mitigation to obtain a successful loan modification outcome by browsing our home loan article library.

If you do not qualify for a modified loan and require additional information about entering into a short sale agreement, we encourage you to visit to purchase our step-by-step guide.