Are you having an incredibly tough time keeping up with your mortgage payments?
You have the right to contact your mortgage lender and ask them if they’d be willing to modify your loan terms or give you the ability to take part in a short sale.
But before they allow you to do anything, you’ll need to write a hardship letter to your lender and let them know why you think you deserve a loan modification or short sale. Your letter will serve as your opportunity to bring your lender up to speed as far as your financial well-being is concerned.
Writing an effective hardship letter might sound easy. But it’s a little more complicated than you might think. Here’s a guide for writing an effective hardship letter.
Keep Your Hardship Letter as Concise as It Can Be
It’s easy for people to get really carried away when they’re writing a hardship letter. They think they need to list every single bad thing that’s happened to them over the course of the last year to get a lender to believe just how bad things are.
You might be tempted to take this approach when putting together your letter. But rather than going that route, keep your letter concise. Don’t make it any longer than one page.
A lender won’t have all day to sit around and read your entire story. So instead, include the essential details and make every word in your letter count. It’ll improve the chances of your lender actually reading through your whole letter and taking you seriously.
Be Specific With the Request You’re Making to Your Lender
At the beginning of your hardship letter, you should clearly state the request that you’re making of your lender. There shouldn’t be any confusion as far as what you want your lender to do for you.
You might begin by saying something as simple as, “I wish to restructure the terms of my mortgage and get access to a lower interest rate immediately.” This will allow your lender to see exactly what you hope to get out of your letter.
Does that mean they’re going to give it to you? Absolutely not. But it does mean they’ll have a crystal clear idea of what you’re hoping to achieve with your letter.
Explain Your Financial Hardship in Great Detail
Once you’ve gotten your lender’s attention by making a clear request to them, it’ll be time to lay out the financial hardship you’ve experienced. You should be as forthright as possible with this part of the letter.
There are so many reasons why people experience money problems. Some of these reasons include:
- Unemployment or the sudden loss of income
- Medical expenses
- The death of an immediate family member
- A divorce or separation
- Military service
- Unexpected home repairs
- Incarceration
Pick your reason and tell your lender all about it in one or two paragraphs. Feel free to share all the gory details surrounding your financial struggles.
For example, if you’re $250,000 in the hole because of a medical issue that put your husband in the hospital for three weeks, say that. If the breadwinner in your family passed away and reduced your income significantly, say that.
Your lender should feel your pain and know exactly why you’ve fallen behind on mortgage payments after reading this part of the letter. Make a strong case for yourself without going on for too long.
Let Your Lender Know Your Financial Situation Is Not Going to Change
After you’ve written about why your financial situation is so dire, emphasize the fact that your situation is not going to change.
Many lenders will refuse to adjust the terms of a loan or shut down the idea of a short sale if you’re the slightest bit hopeful about your financial future. If there’s a chance you might get your finances back on track in a month or two, they won’t want to let you out of your current mortgage agreement.
Let your lender know why you’re going to be stuck in a financial bind for the foreseeable future. They’ll be more likely to acquiesce to your request if they think there’s a chance you’re going to fall into an even worse situation eventually.
State Your Request for a Second Time Near the End of Your Letter
When it comes time to close your hardship letter, restate your request from the beginning for a second time just to drive home your point.
Then, thank your lender for taking the time to hear your hardships and carefully consider them. Mention that you’re looking forward to their response and that you want to continue to work with them to make things right.
Revise Your Letter to Make Sure It’s Effective
Before you send your hardship letter to your lender, revise it several times to see if there are any places you can improve. Take out any words that might be difficult for someone to understand and tighten it up so that it’s to the point.
If possible, ask someone you trust to take a look at the letter for you and make recommendations. If you’re currently working with a lawyer, they might be willing to check out your letter and tell you what you could do to make it stronger.
From there, mail your letter off to your lender and hope for the best. You should receive a response from them soon letting you know if they’re willing to honor the request you have made.
Start Putting Together an Effective Hardship Letter Today
Going through a financial hardship isn’t fun at all. But you can get some relief from it if you’re able to write a compelling hardship letter.
You can write hardship letters to mortgage lenders as well as any other lenders that you work with. If you’re convincing enough in your letter, you might just be able to get the help you’re looking for from them.
Check out our blog to learn more tips for putting together effective hardship letters.