Why You Need a Loan Modification Hardship LetterA "Financial Hardship Letter" is required by most lenders and is the one opportunity you get to explain your situation 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. Use our Sample Loan Modification Cover Letter and attach a Loan Modification Hardship Letter similar to the Sample provided below to start the process moving with the bank. The Loan Modification Hardship Letter addresses the reasons for your financial difficulty which typically falls into one of two categories-medical issues or job loss. Although some 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 buddies and don't want to help you unless it helps them as well. So while its important to honestly explain your financial condition, let them know how your foreclosure alternative will help them. The biggest benefit to the bank is usually avoiding the time and expense of foreclosure lawsuits, but its also important to remind them that if they don't agree to a reasonable loan modification they'll eventually end up with more real estate and one less customer which is the last thing they want. Because there are so many personal factors involved with each borrower, the Sample "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, although you can do it all yourself the chances 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 on a short sale, hire a realtor who has experience handling short sales and is someone you can trust. 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. Sample Loan Modification Hardship LetterFINANCIAL HARDSHIP LETTER FOR LOAN NUMBER_____This Financial Hardship Letter will summarize our current financial situation, explain how we got here and support our request for a loan modification to help us stay in our home and avoid a foreclosure lawsuit 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 our resulting underwater mortgage. Because of my recent unemployment [or medical problems], our household income has been significantly reduced. In fact, our income has been reduced from $____/month in 2010 to $_____/month currently. Although I expect to return to work in the near future, we simply need some assistance in the short term to keep payments on track and eventually resume a normal existence. 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 as well as 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 helping to protect 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.
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