Writing A Hardship Letter That The Mortgage Company Will Believe

These days, there are a lot of people who are feeling the effects of a down economy. They are financially stuck between a rock and a hard place. They are not only broke, but there is very little food in the cupboard and they have been driving on gas fumes for days. They don’t want to answer the phone because they know that it’s a bill collector trying to get a little bit of your money, so he can put a little food on his table.

A few years ago, statistics said that the average person only needed about a three hundred dollar a month increase in household income to be financially comfortable. Well now, with layoffs, slow downs and hours cut, I think that dollar amount is probably much higher. If you can’t increase your income by several hundred dollars a month, you have to lower your expenses by that amount. But how do you do that?

A lot of people are looking at their single biggest expense, their home mortgage. But how do you lower your mortgage payments? You have to convince the mortgage company that you can’t afford to pay the mortgage payments at the current rate. You have to make them believe that it would be in their best interest for them to lower your payments.

The first step in this process is to write, "The Hardship Letter." This hardship letter is your opening statement into the situation.

The Hardship Letter should not be more than one page long. It should include:

A. Events leading to the situation which caused the you to miss payment(s), if in fact you have missed payments.

B. It should describe the situation itself.

C. It should have an explanation of what the homeowner is doing to correct the situation.

D. It should explain the homeowners intentions for the home.

E. And last, there should be a plea to the mortgage company for support.

There are plenty of lender "acceptable" reasons for getting behind on your mortgage payments. Here are a few that the mortgage companies have given to us.

1. Unemployment 8. Issue with Mortgage Lender

2. Divorce / Separation 9. Excessive Utility Cost

3. Illness / Surgery 10. Major Auto Repairs

4. Death in immediate family 11. Natural Disaster

5. Loss of Rental Income 12. Mortgage Payment Increase

6. Temporary loss of income 13. Too much debt

7. Incarceration

Remember, whatever the hardship, the lender wants to know how this tragedy is being overcome. What is the homeowner doing to fix this problem? The only issues that the lender is really concerned about is;

How will the mortgage company get paid?

How much money will the mortgage get?

When will the mortgage company begin to get its money?

If the situation can’t be fixed to some degree, the lender feels that the homeowner can’t afford the home. This situation has to be fixed to the point that the homeowner can make consistent payments at a reasonable, albeit, lower level.

The hardship letter should answer these questions for the lender.

When the hardship letter answers these questions up front, the lender will have a reason to believe in the homeowner and will be more likely to consider offering a loan modification.

Lawrence A. Robinson - CEO

The Steeple Home Team

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