What Is a Loan Modification Hardship Letter?
A Financial Hardship Letter is required by most lenders before they’ll consider your request for a Loan Modification and is the best chance you’ll have to explain your financial troubles in personal terms. While they’re not looking for your life history, banks want to know they’re not getting ripped off and that you have a legitimate reason for requesting help. To improve the chances of getting your Foreclosure Option approved, use our Loan Modification Cover Letter and Hardship Letter similar to the example provided below. More on Foreclosure Loan Modification.
The Loan Modification Hardship Letter covers the reasons for your financial difficulty and typically falls into one of two categories-medical issues or job loss. Although many homeowners are facing foreclosure because of a change in interest rates or other loan terms, most of these situations are also accompanied by unemployment or medical conditions as well.
Remember, banks are not your friends and won’t help you unless it’s good for them as well so let them know how your foreclosure plan is the best option for them. The biggest benefit to the bank is avoiding the time and expense of Foreclosure Lawsuits but its also important to point out that without a loan modification they’ll eventually end up with more property to maintain and one less customer in addition to a long foreclosure battle.
Because there are so many different issues with each borrower, the Loan Modification Hardship Letter below should only be used as a guide for what type of information to include in your letter. Personalize your situation by letting the bank know there’s a reason for your problems and that you’re strong and intelligent enough to protect your foreclosure rights and not just roll over and give up.
Remember that with any of the foreclosure options we cover the chance of success greatly improve when you hire qualified and experienced professionals to help you. If you’re looking for a loan modification, hire someone who can help you get the job done but make sure you don’t pay up front fees and be sure to work with them using the information provided on our website.
If you decide that your best foreclosure option is a Short Sale, hire a realtor who has experience handling short sales and is someone you can trust. Foreclosure Short Sales
With a Deed in Lieu of Foreclosure, a brief meeting with an attorney to discuss your legal rights and obligations can only help you avoid problems and maximize your benefits. Deed in Lieu of Foreclosure
*You will also need the Sample Loan Modification Cover Letter
Sample Loan Modification Hardship Letter
FINANCIAL HARDSHIP LETTER FOR LOAN NUMBER_____
This Hardship Letter will summarize our current financial situation, briefly explain how we got here and provide you with the information needed to properly review our request for a loan modification. Once approved, the loan modification will let us stay in our home and avoid a foreclosure process with nothing to gain for either side.
Our present difficulties arise from a combination of two factors – recent job loss [or medical problems] and the deterioration of the housing market and resulting underwater mortgage.
Because of my recent unemployment [or medical problems], our household finances have been greatly damaged. In fact, our income has been reduced from $____/month to $_____/month currently with expenses of $______/month. Although I expect to return to work in the near future, we need assistance in the short term to keep payments on track and eventually resume a normal operations.
Further complicating matters, because we have an underwater mortgage typical relief avenues like opening a home equity line or getting a second mortgage are simply unavailable when there’s no equity in the home.
As a result of our reduced income and the unavailability of equity based credit, a loan modification is the only option that will allow us to remain in our home while at the same time protecting our financial future. By agreeing to a principal reduction that results in lower payments overall, you’ll help us survive this temporary setback while modifying the loan to more accurately reflect current property values and once again making home ownership a worthwhile investment.
The alternative in light of our difficult financial condition is a long and expensive foreclosure lawsuit for the bank with nothing to gain but more real estate to add to an already bloated inventory. Add to that the costs of insurance, taxes and general maintenance and it’s pretty clear that a fair and reasonable loan modification is the best outcome for all involved.
Please let us know if you need any additional financial information and thank you for your time and consideration.