For most borrowers, the first time they will become aware of the fact that a hardship letter is even required when applying for loan modification, is when they come to make their own application. And even then, it is complicated for some to understand why their lender would require such a letter and what they should include in it.

Even if you already meet the eligibility criteria for a loan modification, the hardship letter will still be essential as this is the means through which the lender can verify your eligibility. It is of paramount importance to your lender in order that they can hear your case, get to the bottom of your circumstances and thus enable you to negotiate the terms of your loan, ultimately resulting in you keeping your home. So the letter is absolutely worth the effort to get right.

Of course, the details of your hardship letter will depend completely on your own personal situation. However, some steps for the basic writing of such a letter will be useful to follow:

1. Before you put pen to paper, find all financial documentation you will need. This will include the same sort of information you would use to file an annual tax statement. It will include bank statement, tax returns and pay stubs. The key documents should be kept within easy reach for reference during your writing. Pay attention to detail. Your bank or lender receives thousands upon thousands of hardship letters and yours must be complete and detailed in order that they will consider your loan modification request.

2. Go through and note down every single individual financial problem going back over the past year, minimum. Remember that you want to make it easy quick and easy for your bank to assess your situation as you can, so make sure you have the correct dates and that you are clear and concise.

3. The next step is always to work out what you can afford. What is your current monthly payment? How much do you earn? Write down all sources of income and then subtract all monthly outgoings and work out what you can afford this way. If you don’t have absolutely precise figures down to the cent, don’t worry. Make a sensible estimate because this demonstrates to your lender that you are aware of your cash flow and thus that you are a safe investment for a loan modification.

These steps will set you off to a simple and easy start. So when you eventually come to pen your final draft, also try to bear in mind the following:

• You should be concise without being unclear. This means ensuring that you have all the details you need without any unnecessary additions and pointless information. Appealing on an emotional level may help to win the empathy of your leader, but this loan modification hardship letter should concentrate more on the financial facts that will prove to your bank that you are an eligible and worthwhile candidate for a loan modification plan.
  
  
• Don’t mention any plans to sell your house! The lender or bank is less likely to accept you for loan modification if you plan to be leaving the house anyway. They much prefer to invest such plans in clients who will remain with them for the long term.
  
  
• Don’t give them your life story. Your bank doesn’t require gossip ascertaining to your divorce or an emotional appeal about student finances. Stick with the facts only and ask yourself, with everything that you write down, does the bank need to know this? The letter should be financial fact.
  
  
• Be polite and courteous. You might well have experience past problems with your bank or lender but this hardship letter is absolutely not the place to elaborate on or complain about such. You are appealing for their assistance and thus manners are essential.
  
  
• Provide the financial documentation to enable the bank to verify what you say in your hardship letter.

Fundamentally, remember that there is more help than ever being made available to struggling homeowners at the moment. Lenders and banks are happy to help once they have the proof that you are in need and that a loan modification plan can be mutually beneficial for you both. Adhering to the above points will get your hardship letter off to a great start and put you on the right track to securing your loan modification plan.