What is a Mortgage Modification?
This letter is the place where the borrower can express his or her financial troubles in personal terms to have the best chance to stop a foreclosure or receive better terms on an outstanding loan.
How to Write an Effective Hardship Letter for Loan Modification The two main reasons a borrower needs modification on a loan are job loss and medical issues. However, other reasons may be divorce, death of a spouse, a newborn child, military duty and relocation. Other possibilities are a failed business or a business that is suffering from an economic slowdown.
Most lenders are not interested in owning and maintaining property or repossessing a virtually worthless car, so they look for ways to avoid a foreclosure lawsuit. The letter should have a positive tone that gives the impression that the person is a solid borrower who wants to pay his or her debts and do the right thing.
The reason for the hardship should be stated matter-of-factly. The borrower should clearly state the ways in which he or she is planning to correct their financial situation.
They may need to give proof that they are searching for a job, or give medical records that show they will be able to work at a specified time. The letter may be the single most important factor in whether a lender will modify a loan.
The lender will want to see the following questions answered: Personal letters are more likely to be viewed as genuine and not from a template.
There are a few things that should not be included in a loan modification letter. First, the letter should not give a long and detailed narration of the hardship. The letter should clearly state the facts of the hardship and not exaggerate it.
The letter should be honest and not put the blame on someone else for the difficulty. Below is a sample hardship letter for loan modification.
The letter should be succinct and not more than one page. The borrower should keep a copy of the letter as well as the receipt that proves the lender received it.When applying for a loan modification, short sale, or deed in lieu of foreclosure (collectively referred to as forms of “loss mitigation”), one of the requirements in some cases will be for you to write a hardship letter.
Writing a hardship letter to the mortgage company for a reduction in payments as well as hardship letter for immigration is not something you should rush over.
In the application request, you will need to keep the tone formal throughout, even if you have initially been refused. Our Space Coast Credit Union help center allows you to find answers to frequently asked questions, access auto and mortgage loan calculators, articles, and more.
A financial hardship letter should explain to your lender why you are in financial distress and your capacity to resolve it. There are different reasons for writing a hardship letter, but the most common these days are for the purposes of requesting a loan modification or short sale to avoid foreclosure.
A hardship must be something that has been out of your control that has forced you into a financial corner. Medical issues, job loss, death in the family are examples of hardships. If you’re having problems paying your mortgage, one option you have to avoid foreclosure is a mortgage modification to lower your monthly mortgage payments.