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Hardship Letters - Applying for a Loan Modification

One of the requirements for most loan modifications is a written explanation of what event or events have caused or will cause the borrower to fall behind on his or her mortgage payments. This "hardship letter" must be detailed, describing in specific dollar amounts exactly how much money the borrower has lost and how much he or she would like to see their payments reduced by. This gives the lender the information needed to make a decision about whether to consider a loan modification.

In approving a loan modification application, the mortgage loan servicer will want to know: Is your hardship short term or long term? If you are granted a modification, will you be able to keep current with your payments?

The following are some of the specific types of circumstances servicers may consider hardships:

  • Illness
  • Job loss
  • Reduced income
  • Failed business
  • Job relocation
  • Imprisonment
  • Death of spouse
  • Death of co-borrower
  • Divorce or separation
  • Military duty
  • Medical bills
  • Property damage
  • Adjustable Rate Mortgage causing a significant increase in monthly payments

Your hardship letter should be straight and to the point but should include all relevant financial information, including a solution to the problem. This solution is the reduced mortgage payment you are seeking and how this will cure the financial difficulties you are currently experiencing. A hardship letter should be one page long, or two pages at the maximum.

The hardship letter is only one step in the loan modification process. As these cases have the potential to be complex and difficult to deal with, it is recommended that you seek professional help. At Jacoby & Jacoby, the experienced legal team stands prepared to protect your interests if you are a borrower seeking a loan modification due to any type of hardship. The firm also handles bankruptcy and foreclosure defense proceedings and can therefore offer you information regarding potential alternatives if you do not qualify for modification.

Contact a Long Island loan modification attorney at the firm today.

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