subject: 3 Key Points To Include In A Loan Modification Hardship Letter [print this page] More and more banks are feeling the pressure to offer home mortgage loan modification programs to their customers. If you are underwater in your loan and having difficulty making your monthly loan payments, asking for a change to the terms of your mortgage might provide you with needed relief.
Writing a Hardship or Request Letter
Before submitting a loan modification hardship letter, call your mortgage lenders loss mitigation department and ask for the specific requirements of their program. Ask if there is a specific person or manager that handles requests for changes to home loans.
Make sure that your letter contains contact information and your loan number. When you send the letter, send it via certified mail with a signature receipt. This way, you will know that your letter was received. Also, make sure you keep a copy of your letter and any correspondence for your own reference.
Important Points to Highlight
When you write the letter to your lender, you should highlight the following three points:
Nature of Hardship You need to outline the specific reasons you are having difficulty making your loan payments. It may be that you are unemployed, have become ill or are having other significant problems that have caused you financial distress, making it impossible for you to afford your loan payments. It is important that you demonstrate that your home expenses far exceed your income. You should also be able to provide evidence to back up your claims, such as an employment termination notice or medical bills.
Bankruptcy as a Possibility Having demonstrated that you are financially distressed, include a statement that you are considering bankruptcy as a solution to your financial problems. Bankruptcy is not something creditors like to hear you considering because it means that they will be forced to accept a low settlement amount for money you owe to them. Current bankruptcy laws require you to pay at least a portion of your debts if you have the ability to do so, but creditors do not usually receive payment for the entire amount owed.
Your Goal Your lender needs to know what you are specifically asking for from them. It is important that you demonstrate to them that you have carefully thought out a reasonable and attainable solution to your financial hardship. You may have a combination of solutions that will make your goal possible. For example, it may be that a combination of lowering your interest mortgage rate and extending the life of the loan will make it possible for you to avoid bankruptcy. You may want them to reassess the value of your home to current levels and rewrite your loan to reflect the current adjusted value.
By writing a letter to the loss mitigation department of your lender, or by contacting a loan modification attorney to assist, you begin the process with your lender for a loan modification plan.Keep in mind that notifying them that you are experiencing financial distress to the point of considering bankruptcy is only the opening salvo in what may be a long process. However, once your home loan is modified, you will be able to begin the process of rebuilding.Your credit and getting back on the road to financial security.
