March 15, 2013

Main Ingredients in a Loan Modification Financial Hardship Letter

Financial hardship letters are a way to ask a lender for help with a loan modification. A Miami-Dade County foreclosure attorney further explains this process.

Financial hardship letters are a way to explain why you are having difficulty with paying your mortgage. Before you attempt to work with your lender on finding a solution to your problem, which may include a loan modification, you will need to provide a letter of explanation, which is something a qualified foreclosure lawyer can help you with.

What Circumstances Might Necessitate a Financial Hardship Letter?

There are certain circumstances that may require you to seek help from your lender including:

• unexpected loss of income or additional expenses due to the death of a family member;
• loss of a job (due to a situation that was out of your control);
• lapse in payment for extended benefits (such as Worker’s Compensation, unemployment, or short-term disability/long-term disability);
• hours of employment reduced (not by choice);
• elimination of overtime
• not being paid while out of work for medical reasons; and
• other extenuating circumstances.

Ingredients of a Financial Hardship Letter

There are certain ingredients that should be included in your letter to make it effective. Start the letter by explaining why you are writing it. You should include what financial hardship is present and necessitated the letter.

Do not just say, “I’m out of work.” It could be assumed you are out of work because you quit. Be specific. “The company I have worked at for the last 20 years downsized and as a result they let go the department in which I worked.”

In addition to stating what your financial hardship is, clearly explain what you are looking for. If you would like the lender to do a loan modification, say that.

You should also include what monthly payment you can afford. You certainly do not want to ask for a ridiculously low number, but at the same time you have to be honest about what you can truly afford.

The tone of your letter is important. You do not want to sound like a robot, so make it personal, yet professional. The letter should not drone on and on. State the basics of your situation, but include enough detail so the lender fully understands your current position.

Most importantly, be honest. Do not exaggerate or lie about your situation, as they are likely to discover the truth eventually. If you actually quit your job, this will be discovered.

It is also important to be grateful. This is not the time to vent about the astronomically high interest rate you have been paying, or how the mortgage companies are only out for themselves. You are asking for their help, so express gratefulness for their willingness to at least consider a loan modification.

End the letter by thanking them for the time they have taken to read it and for their consideration. Remember that you are asking them to do something for you, so you should remain respectful.

We often can’t predict when we are going to suddenly be hit with a financial hardship. The loss of a job or spouse, or an unexpected medical bill can change everything in a moment. As a result, you may face the prospect of losing your home.

If you would like to learn more about your rights, contact a foreclosure attorney at The Neustein Law Group, P.A. We serve residents of Miami-Dade County, Broward County, and Palm Beach County, and as well as other counties throughout Florida. Whether you are at risk of defaulting on your mortgage loan or facing a foreclosure, we may be able to help. Contact us today at 305-531-2545 (Direct) or 888-400-ATTY (2889) (Toll Free).