If a homeowner needs to modify his or her home loan, they will most probably be asked for a mortgage payment hardship letter. This letter will contain the details of the financial setbacks that the homeowner is undergoing that have caused him or her to be unable to pay their monthly mortgage payments.
The first thing the homeowner needs to do is contact the lender and find out if there are any procedures to follow to apply for loan modification. It’s important to follow all procedures, because if they are not followed, there is a good chance that the lender will disregard the request.
The homeowner also needs to find out the eligible hardships that are recognized by their lender. Not all reasons for financial hardship qualify as a genuine financial hardship. For example, if the homeowner lost all of his or her savings when they visited Las Vegas, it would not be considered an eligible hardship unless they had been diagnosed as having an addiction and are receiving treatment for it.
Along with being genuine, the hardship must also have caused the homeowner to be unable to pay his or her mortgage. There are many genuine hardships. Here are a few of the most common:
• Loss of job or relocation
• Income reduction from loss of overtime or from wage reduction
• A business that has failed because of an economic slowdown
• Separation or divorce
• The expense of having another dependent such as a newborn or from adoption
• The death of an income-earner who was helping make the payments
• A sudden increase of the interest rate on an adjustable-rate mortgage
• Unexpected medical bills from illness or injury
• Military duty
• Gambling by a wage earner who is currently undergoing treatment
• A wage earner becomes incarcerated
The loan officer who reads hardship letters needs to receive certain in formation in order to approve a loan modification. They will be looking for:
• What caused the financial hardship
• A specific date or range of dates when the hardship occurred
• Whether the hardship is temporary or permanent – a temporary hardship is often loss of job or excessive medical bills. A permanent hardship would be a death of a wage earner or divorce
• Whether the homeowner is serious about keeping the home
• The number of months the homeowner is behind in payments and the total amount of the deficiency
• If the homeowner can afford to make some payments, how much can they afford monthly
• If the homeowner is doing anything specific to recover their financial footing. For example, are they reducing spending or selling assets
Below is a sample mortgage payment hardship letter. It should be written in formal business-letter style and sent by certified mail.
Sample Mortgage Payment Hardship Letter
Name of Homeowner
Address of Homeowner
City, State, Zip Code
Name of Loan Officer
Name of Lending Institution
Address of Lending Institution
City, State, Zip Code
RE: Request a modification of my home loan due to financial hardship
Dear Name of Loan Officer:
I am writing to request a modification of my home loan. I have been a customer of your bank for 20 years and have always made my mortgage payments on time until recently. I am three months behind in my mortgage payments of AMOUNT per month. The total amount I owe on my loan is AMOUNT. The reason I have not made payments for the past three months is because my husband was in a car accident and needed to be hospitalized for two weeks. When he came home, I had to quit my job in order to care for him until he was able to bathe and dress himself. We used our savings to pay for the unexpected medical bills. I have enclosed a copy of the hospital bill that includes treatment, medication and doctor’s costs.
I have started work again and have employed a personal injury lawyer who is willing to make a claim for my husband against the insurance company of the person who caused the accident through negligent driving. I believe our financial situation will be back to normal in about six months. We very much want to keep our home and have every intention of continuing the normal payments as soon as we can. I would like to request the payments be reduced by half the amount for the next six months starting now DATE, and ending on DATE. I would also like to request that the past three month be forgiven. We will start making regular payments again on DATE. I will abide by any measures you suggest to help me keep my home.
Thank you for taking the time to consider my request. I can be reached at Phone Number or Email address if you have any questions.
Signature of Homeowner
Printed Name of Homeowner
List of Enclosures: Medical papers
By Andre Bradley