You don't have to be Hemingway to write an effective hardship letter for a loan workout.  However, writing a hardship letter for a loan modification is a little tricky.  You must be able to convince your lender that you are a good candidate for a loan workout because of your current dire financial situation.  On the other hand, you also have to make them understand that if given the lower monthly payment, you will be able to afford to pay and maintain your home.  Ideally, you want to convey your circumstances in a compelling story, but one that is brief as well, lenders are too busy to read a novel!  Here are some good tips to help you begin your own letter.

Did you know that a hardship letter for a loan modification has 4 critical elements?  A successful letter will cover all of these elements in a descriptive and convincing manner.  It is important to not leave one of these out, or you may not gain the empathy of your lender and you may not be granted a loan workout.  Here is some detailed information about 3 of the items you need to cover in your own letter.

Loan Modification Hardship letter element #1 is the timing of the circumstances that caused the late payments.  The lender wants to be able to verify that your difficulties began at the same time or near the time of your late payments.  This tells them there is a direct relation to your financial stress and your inability to pay the mortgage.  For example, if you were hospitalized in January, perhaps your first late payment was in February and thereafter you could not get caught up.  This makes sense and is easy to document.  If your interest rate reset to a higher payment in June, but you struggled for a month trying to make the higher payment, explain this time line so that it all makes sense.

Loan Modification Hardship letter element #2 is being able to describe the circumstances surrounding your hardship so that your lender can see the situation was out of your control.  You can gain the banks empathy and understanding with a few details-not too long or involved though.  Let's say you were laid off your job and were unable to find work for a few months.  You now have a new job, but the pay is less.  Explain how unexpected the lay off was, how hard you had to look for work, any new training you took to gain employment, etc.

Loan Modification Hardship letter element #3 is very important to your bank.  Tell the lender what steps you have taken so that you feel you will not become delinquent again.  Many modified loans are experiencing re-defaults, and banks are wary of this happening.  If you have cut expenses, adjusted your budget, let them know.

Knowing how to write a hardship letter for loan modification is one of the most important aspects of getting approved.  It may seem like it is easy, but if you don't convince your lender that you are deserving, they may decide against offering you a loan workout.  An acceptable financial hardship situation is the number one criteria for approval-take the time to learn all 4 elements to a successful hardship letter so you have the best chance of success.  Now get that pad and pen and get started!

You can get the help you need to apply and qualify for a loan modification by ordering the best selling handbook for homeowners, The Complete Loan Modification Guide. This is a low cost, easy to read, home edition loan mod kit that will provide you with everything you need to prepare a professional and acceptable loan modification application. You are provided with all of the necessary forms and given detailed directions on how to complete them properly. The Complete Loan Modification Guide will take you step by step through calculating your debt ratio, completing the financial statements, writing your hardship letter and then putting it all together to submit to your lender.

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