When you apply for a loan modification through the Home Stimulus Plan, you will be required to write a hardship letter detailing your financial problems. Financial hardship is one of the main requirements for a loan modification under this program.

Financial hardship means something happened to you; you were a victim of circumstances that made it impossible for you to make your house payment. You explain these events in a hardship letter. It is an integral part of your application package. But, don't mistake this for a writing assignment that is going to be judged on self-expression and emotional appeal! Just the facts, please.

This letter should be no longer than a page and a half long. Your lender wants just the facts.

They don't want to muddle through a lot of personal feelings looking for the pertinent information they need regarding income and expenses. They are making a judgement on your risk as a borrower.

As you are intently making a case for your financial hardship, don't forget to be sure you establish your ability to make the modified payment in the future. This is very important. They may very well feel sorry for you for your job loss, divorce, loss of a spouse, or whatever caused your financial situation. However, they can't give you a loan modification if you can't make the new payments, either.

You need to get your facts conveyed to the lender in your hardship letter, and of course you want to do it in as positive a manner as you can. You also must remember that this is not a creative writing assignment. You are not writing fiction, either! You must document every statement you make regarding income and expenses. So, there is no need to stretch the truth, because you will be found out.

You can only apply once for a loan modification through the Home Stimulus Plan, so you want to carefully follow the guidelines. Have everything prepared before you contact your lender.