Writing a loan modification hardship letter means that you are formally requesting your lender for some changes to the terms and conditions of your loan. This letter is an opportunity for you to highlight your financial difficulties and to prevent a foreclosure for the case of a mortgage. This letter must be factual, rather than a sob story, however, so do make sure that you write it properly.
Why a Loan Modification May Be Needed
There are two key reasons as to why you may apply for a loan modification:
- You have lost your job.
- Your are facing serious medical issues.
Other reasons, such as divorce, separation, death in the family, incarceration, and military duty, may also be accepted. However, whatever the reason may be, you have to make sure that you can provide sufficient evidence for it. You also have show how it is affecting you and your family financially.
Questions to Serve as Guide for the Content of the Hardship Letter
A lender will have a number of questions and you must attempt to answer these immediately. These are:
- Why are you behind in your payments?
- When did you start to fall behind?
- Will your situation improve and, if so, when and how?
- What modifications are you asking for?
- How much you can pay in the immediate and how long for.
- Whether you are receiving treatment if the hardship is due to an addiction.
Tips in Writing a Hardship Letter for Loan Modification
You must make sure that you offer something that benefits your lender as well. Being able to collect something and keeping the loan active would be better than you getting into bankruptcy or foreclosure. If you explain that you have every intention of repaying your debt but that you simply need some respite at this point, your creditor may be willing to consider it.
Your letter should be positive in tone. You must show yourself to be a trustworthy person who always pay as long as your finances allow it. Be matter of fact about this and provide evidence for your claims. Include payslips, copies of bills, bank statements, proof of attempts to reduce your expenses and increase your income, and so on.
It is also possible that you have sought out the assistance of experts like a lawyer or financial consultant. If so, they may be writing the letter for you. However, it is vital that you sign it and not the consultant or legal professional. You should also avoid simply copying a template.
When you write your loan modification hardship letter, keep it short and to the point. State the facts of your situation in an honest way. Never place any blame on the lender or other third party for your situation either. These letters are formal letters and they will be kept on your record permanently. Hence, make sure that it is written appropriately, addressed to the correct person in the right department, and free from spelling and grammar errors. It is also likely that your lender will have a standard form to fill in for loan modification requests, so do find out about that before sending your letter. Make sure you keep copies for your own records, and send the letter via registered post.
Hardship Letter For Loan Modification Example
{Your Name}
{Your Address}
{Address Continued}
{Your Phone Number}
{Mortgage Company Name}
ATTN: {appropriate department}
{Address}
{Address Continued}
{Date}
RE: loan modification for {Name}
To Whom It May Concern:
I am writing this letter in support for my loan modification plan for the {mortgage, loan, etc.} on the {home, car, etc.} located at {address}. My intention is to stay in my home, and my hope is that the loan modification will allow me to get my loan in order and back on the right path.
I have been unable to pay my mortgage payments on time due to {explanation of the reasons you are experiencing hardship; be specific}.
I have attached the appropriate financial documents, including {list of documents}, which should illustrate to you how serious my situation has become.
I hope that we can work together, and quickly, to modify this loan so that I may begin to make the payments again as soon as possible.
Sincerely,
{Sender Name}