Loan Modification Hardship Letter
Lenders are receiving a large number of loan modifications and short sale requests. So, it is in your best interest to put forth a great argument as to why you are a good candidate for a loan modification. A loan modification may include interest rate reductions, interest only periods, increased loan term, decreased principal balance, removal or reduction in prepay penalties, or any combo of these.
There are quite a number of reasons a bank will consider a loan modification. Here are a few acceptable reasons:
- Income change (to negatively impact paying your bills)
- Loss of Job
- An adjustment of your interest rate when your loan is an ARM
- Death or Illness in the family
- Relocation of homeowner
- Divorce of principals on the loan
- Increased financial burden (unexpected debt, law suit settlement, etc.)
If one or more of these hardships apply to you, you’ll need to craft a convincing letter to spell out your hardship: how you ended where you are now and why a loan modification will solve the problem. Do not included information that is false, you need to be honest…do not place yourself in a difficult situation if the bank asks for confirmation on the information stated in the letter.
The lender will most likely will require your financials such as recent statements of income, expenses and more.