Steps to Get Your Mortgage Loan Modified: Part II

If you want to get a loan modification, you'll need to draft a hardship letter for your lender.

In this second article in this three-part series, we discuss the documents you will need to provide to your lender as part of your loan modification application, focusing on the hardship letter. In part one, we reviewed the criteria that lenders look for when considering a loan modification application and alternatives if a loan modification won't work out (see Steps to Get a Loan Modification: Part I).

Documents You Will Need to Send to Your Lender in Order to Get Your Loan Modified

The exact list of documents your lender will require from you may differ from the list below, but these are the typical documents you may need to provide as part of your loan modification application:

  • Tax returns (often, two years worth)
  • Paystubs or proof of income for the two most recent months (including alimony, child support, social security, disability, etc.)
  • Copy of your property tax bill
  • Copy of your homeowner's insurance statement
  • Hardship letter or affidavit
  • Bank account statements for the two most recent months, and
  • Monthly income/expenses.

Your Hardship Letter

Your hardship letter should be simple and based on facts. It should be financially informative. It should clearly outline the excessive financial burden you are trying to manage. It should be sincere. It should express your hope of staying in your home and the reasons why doing so is important to you and to your family. Explain why modification is the most sensible approach for your lender and for you.

Important Hardship Letter Elements

Your hardship letter should do three things:

  • Inform your lender in simple and specific terms the facts or events which have had a negative financial impact on you. Your letter should describe the specific financial events which have occurred in simple terms and the specific financial impact which has resulted from those events.
  • Clearly and logically relate your modification request. Your letter should state that you are seeking a modification and show your lender how you intend to keep making your mortgage payments (although reduced).
  • Clearly and logically explain how you are overcoming your hardship. The letter should indicate that you are making real and measurable attempts to rebuild your finances. Your application should reinforce your lender's belief that you are a person in charge of your finances who has been affected through no fault of your own and is a solid credit risk.

What Not to Include in a Hardship Letter

Keep in mind that you're looking to modify the terms of your mortgage contract--you're not looking to sue your lender (not at this point, anyway). Don't contemplate or assert fraud in your hardship letter.

Next: In Steps to Get a Loan Modification: Part III, we list the types of hardship that a lender will typically accept as valid.

Previous: To review the basic criteria that lenders look for in loan modification candidates, and options to consider if a loan modification request fails, go back and read Part I.

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