What Is a Loan Modification Letter?
A hardship letter for mortgage modification is not what a bank or mortgage company will use as a basis for modification approval. The purpose of a hardship or loan modification letter is to explain in clear, easy to understand language why payments were missed and proposed solutions.
There are many different situations that can require writing a letter of hardship. These include:
- Request that your mortgage holder allow you to “short sale” your home
- Request to your bank or credit card company that debt be consolidated or restructured
- Requests to a hospital or medical care provider to reduce their billings for compassionate reasons
A financial hardship letter is a letter that is written to a creditor explaining a financial difficulty that you are in and requesting some sort of remedy, depending on the particular situation.
How to Write a Hardship or Loan Modification Letter
Hardship letters should be brief and directly to the point. When addressing the letter you should be sure to properly identify yourself and the specific loan you are referring to. Here are the five steps to professional letter writing:
In the introduction of the letter clearly state what it is you are requesting. This might be a loan modification, to be allowed to short sale your home or some other request. Whatever it is make sure the reader can easily understand what that request is.
Next relate the specific circumstances that resulted in your financial hardship. This doesn’t need to be a long drawn out explanation. It could be due to loss of a job, death in the family, a medical situation or something else. A brief statement of the circumstances is all that is required.
Relate any steps that you took to avoid defaulting on your loan. This could include things such as cutting household expenses, going into your savings or any other steps you may have taken to avoid missing a loan payment
Propose a solution to the problem. Lenders do not grant loan modifications easily, but at the same time a viable modification is more preferable to them than having to write a loan off. Solutions could involve a lowering of the interest rate or some other loan modification that would lessen your payment.
Conclude by summarizing your purpose and thank the reader for their time and consideration. Use a respectful approach throughout the letter and under no circumstances should you blame the lender or anybody else either directly or indirectly for the situation you find yourself in. Just stick with the facts of the situation.