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Making Home Affordable Program: The Hardship Letter

Hardship Letter fo Mortgage Modification

By now, we’ve heard about the Making Home Affordable Program that allows homeowners sort of a “do over”, or at least, a modification to their current mortgages.

Here’s the thing, though – homeowners approach the hardship letter with sincere efforts of projecting a “human” emotion into their letters. You can be sure that if you do that, your time is wasted. It won’t hurt anything, but the fact is, it doesn’t help either. Still, it’s important – not to mention required – to include this in your modification package.

No Compassion Here

If you’re thinking you can gain a bit of compassion with your hardship letter by stating you’re a grandmother of five, with the hopes that the one who eventually reviews this letter has his own mother who’s also a grandmother, and who has simply fell on hard times, there’s a good chance your letter won’t be acknowledged; in fact, it could very well go unread. Even if it doesn’t go unread, it’s likely just going to be skimmed over and then stuck into a filing cabinet. What’s so frustrating is that you have to go through the motions of putting together an effective letter understanding that it won’t get the attention it deserves.

Because the program is still relatively new, there are a lot of homeowners who get stuck on these letters: what to include, what to admit to, what to avoid. And too they wonder if it will be the basis on which approvals or denials are issued (it plays no role). And the fact is, if you do reveal too much, it could cause problems in your efforts. The key? Keep it simple, brief though honest.

Get to the Point

Also, you need to get straight to the point. Open your letter with something like:

I am attaching this letter as part of a loan modification on my mortgage. After reviewing the paperwork associated with my mortgage, you may know that I owned a rental house. Unfortunately, that house was destroyed in the recent storms and as a result, my family lost part of its income.

If it was a job loss, say so: After 28 years with the same employer, I was shocked to learn it was forced to cease operations in this region of the country.

You want to get straight to the point for a few reasons. First, the loss mitigators want to see within the first few sentences what this applicant was hit with. They don’t want to have to read three pages to find the heart of the matter. In fact, they don’t want to read more than a page total – so it’s important to strive for succinct and complete sentences with no wasted words. Think about it – if you were hit with sentences like these a hundred times a day, you’d likely feel frustrated, too:

My beloved grandmother, who graced this earth for 112 years and who raised eight children, fourteen grandchildren and lived to see the birth of three of her great grandchildren after she watched the love of her life, my grandfather, pass away after battling an illness for close to six months, told us that she simply had nothing to leave anyone in the will and that her home was part of a reverse mortgage that she and my grandfather entered into before his death. We didn’t know why, but we…

or, would you rather see:

Due to decisions made by other family members that were out of my control, I have had to step up to the plate and cover financial bases that I could in no way have anticipated…

Keep it simple!

Don’t Ask, Don’t Tell

Plus, you don’t want to give them anything they haven’t asked for. You run the risk of saying too much and then having to answer uncomfortable questions that were raised by reading your hardship letter. If credit card debt is a reason you’re looking for a loan modification, simply state credit card debt. The details will be included in your credit report, but you don’t want to add it to this letter. You don’t need to list your credit cards and the balances.

While you want to keep it simple, you also want to be specific if it’s a job loss, illness or some other change in your income. A couple of sentences like, “…was diagnosed with lung cancer in 2011” or “…Hurricane Sandy annihilated both my and my husband’s employment sites”.

Don’t make excuses and don’t apply blame. You can do this with a sentence like, “In our efforts to rebuild our family, our primary goal is to pick up the financial pieces of our lives and the first step in doing so is finding a way to keep our family in our home”.

Experts know it’s an uncomfortable letter to write, but as long as you can stay focused on the end result, you should find it easier to manage. If the modification is truly what you’re hoping to gain, it’s just one of those steps that are required. Remember, too, this could be the first step in breaking free from debt, whether it’s credit card, student loan or other financial obligations.

Be sure to include any efforts you made to avoid the problems in the first place. Did you sell the car that you rarely drive? Cut back on other household expenses? Change the deductions on your car insurance? Anything you did, you need to include that in the letter as it shows the decision makers that you tried to avoid finding yourself in this position.

Also – what’s changed that will prevent this from happening again in the future? Can you explain how the temporary setback won’t become a permanent problem?

Finally, be sure to state exactly what you’re asking for. Do you want a lower interest rate? Maybe you’re looking for a short sell? Whatever it is, state it clearly and simply. And speaking of short sales, this has become a solution for many instead of putting their houses on the market which is time consuming and can cause deeper hardships.


The Making Home Affordable Program requires the following, in addition to the hardship letter:

  • A home that’s lost value is not considered a hardship
  • A hardship could be the need to sell right away because of a job transfer or employment opportunity elsewhere
  • The homeowner should write the hardship letter themselves – and not an attorney
  • The letter may be written by hand, but it’s not necessary
  • Monthly mortgage statement
  • Information about 2nd mortgage if applicable
  • Two most recent pay stubs for all household members contributing toward the mortgage payment
  • Last two years of tax returns
  • If self-employed, the most recent quarterly or year-to-date profit and loss statement
  • Documentation of income received from other sources (alimony, child support, social security, etc.)
  • Two most recent bank statements
  • At least one utility bill showing homeowner name and property address
  • Unemployment insurance letter, if applicable
  • Account balances and minimum monthly payments due on all of your credit cards
  • Information about your savings and other assets

You will also be required to provide a Request for Mortgage Assistance form and an IRS Form 4506T-EZ or 4506-T

Look at this way – once it’s behind you, you know you’re well on your way to fewer sleepless nights and a better financial outlook.

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