When in financial hotwater and looking for help, you should depend on a hardship letter. Loan modification is not possible without one. You need to paint a detailed picture of your current financial status. To apply and qualify for a loan modification (otherwise known as a loan workout), you must be facing financial challenge. If approved, you can get an interest rate, as low as 2%, a term-loan up to 40 years and there is the chance of a deferred or forgiven principal balance.
As previously stated, a letter of hardship conveys your financial concerns. It is your chance to not only say you have money problems but also depict in detail what caused them and how you are trying to get back on track. You cannot just write any type of hardship letter. Loan modification calls for an “acceptable hardship”. What is acceptable? Here are a few examples:

1 – A job loss or a reduction in income.
2 – A job relocation that is demanded by an employer.
3 – The death of the homeowner or another immediate family member.
4 – A substantial illness that affects the homeowner or another immediate family member.
5 – Separation or divorce.
6 – Increased expenses without an increase in income.


Now that you understand what types of hardships are labeled “acceptable,” how can you go about writing an effective letter? Keep reading on for a handful of necessary strategies, but don’t forget that banks have seen every thinkable kind of hardship letter. Loan modification is highly sought after in this economy. They have seen and heard everything.
Tip: Be short and concise
Yes, you want to go into exacts about the financial issues you are working with, their causes, your attempts to appease the situation, but do not go on information overload. One or two pages should provide you with enough space. When depicting your money callenges, give a time period for which they began. This should mirror with any tardy payments. Your goal is to make a link between your financial problems and your delinquencies.
Tip: Describe Your Plan
You cannot just pronounce, “I am having money troubles” and expect to receivea loan modification; it does not work that way. Even with a modified loan, how will the lender trust that you are able to make payments? Detail information on your plan of attack. What have you done so far to combat your financial troubles? What are your short-term and long-term goals? Another good idea is to pronounce your community connection (show you have a vested interest in staying in your home and the community); discuss your child’s school, church, and more.
The key is to be well informed and proactive. Millions of homeowners are in your shoes, but not all take steps to fix the concern. When you are informed and proactive, the chances of you losing your home are tiny; lenders like to help out proactive customers.
As exaplained, it is relatively easy to create a hardship letter. Loan modification calls for an acceptable financial hardship, but that is not all you need to do. A hardship letter is only one part of a loan modification application. You will also be required to complete a financial statement and show proof of income. To save time and hassle, it is best to be well informed; review the approval guidelines for the Stimulus Home Saver Plan before you apply.