What to Include in Your Loan Modification Cover Letter
The following Loan Modification Cover Letter is an example of the basic information needed to get a Loan Modification with lower monthly payments and should be used together with our Loan Modification Hardship Letter. You can make any changes to the letter that more accurately reflect your situation and use language you feel more comfortable with. Although we recommend that you work with a mortgage broker to help with your Loan Modification, this letter can be used on your own or with your broker. Read more on Foreclosure Loan Modification.
There are several ways to reduce your monthly payment but the best method and the most equitable plan overall is to reduce the loan amount to accurately reflect the current value of your home. To do this, you’ll need details on what your home is worth to convince the bank that you have an underwater mortgage and need help. More on Underwater Mortgages. When combined with personal financial troubles that you’ll outline in your Hardship Letter, you’re showing the bank that a modification is the best and perhaps only way to avoid foreclosure and a loss for both sides. Learn about the Foreclosure Process.
If the bank is unwilling to reduce your principal, they can adjust your interest rate, change the escrow requirements or extend the term of the loan to result in lower payments over a longer period of time. However, continue to press for a principal reduction before agreeing to other terms. See How the Nationwide Foreclosure Settlement can help you get your loan modified.
*You’ll also need our Loan Modification Hardship Letter.
Sample Loan Modification Cover Letter
Re: Property Address/ Loan Number:
To Whom It May Concern:
We are the borrowers on the above-referenced loan. As a result of deteriorating economic conditions both personally and nationwide, we’ve been forced to dramatically alter our plans to avoid financial catastrophe. Accordingly, we are requesting a loan modification to lower our monthly payments and more accurately reflect the actual value of our home. At that time, we’ll be able to afford payments and our home will no longer be a losing investment.
To support the request for a loan modification, we’ve attached a financial hardship letter summarizing our overall economic condition and how we got there. We’ve also spoken with several realtors and conducted online research to determine the value of our home. Unfortunately, we’ve confirmed that our mortgage is significantly underwater and amount of the underlying loan is much more than we could ever sell our home for.
In fact our loan is so far underwater that it will likely be years before it regains its prior value. [BRIEFLY EXPLAIN YOUR UNDERWATER MORTGAGE EVIDENCE HERE]
After evaluating all of our foreclosure alternatives, we’ve concluded that the only way to salvage and protect our financial future is through a loan modification. This option allows us to work together and stay in our home for years to come while avoiding the time and expense of a foreclosure lawsuit for the bank with little or nothing to gain.
Based on the underwater status of our mortgage, reducing the principal amount of our loan is the fairest way to reduce payments. If necessary, we can look at a combination of reducing the principal and adjusting the interest rate or length of the loan to facilitate reduced payments which is our immediate goal.
As you know, time is of the essence so please contact me as soon as possible to discuss available options and of course let us know if you need any additional information.
Thanks in advance for your anticipated cooperation.