How To Write A Successful Loan Modification Letter
More than 2.8 million homeowners faced foreclosure during the past year according to RealtyTrac.com. Honest, honorable people with every intent of paying their debts have found themselves with impossible financial situations because of the Nation’s massive economic downturn as well as the use of toxic mortgages. In many cases owners are both unable to sell their homes for enough to pay off their loan and equally unable to stay at the property and make their monthly payments.
You may find that in speaking with lenders or applying for help with the government’s loan modification programs that you will need a cover letter. What is it that you should say? In basic terms, you want to say in your hardship letter that you need consideration in difficult circumstances and that both you and the lender can benefit if some sort of accomodation can be worked out.
Some pointers:
- Always send letters and documents to lenders by certified mail with a return receipt requested. Keep the receipts you get from the Postal Service — they’re evidence that you did send material, that it was received and that it was not “lost” in the mail.
- Always include your loan number and full contact information on all documents you submit to the lender.
- If possible, get a direct email and phone number for your lender contact and include it in the letter — this will make it easy to follow up.
- Always be nice to the lender contact — most are folks just trying to do their job.
- Before sending any letter to anyone, read our loan modification posting to better understand what lenders may offer — and what paperwork is required.
Below is a model loan modification letter for use by anyone who needs such a note.
And to all who need this letter we say good luck. As the old expression goes, there but for providence go you or I.
Mr. & Mrs. Robert Jones
Street
City, State, ZIP Code
Daytime Telephone Number
E-Mail Address
Loan #123-456-789
Date
Lender Contact
Lender
Street
City, State, ZIP Code
Daytime Telephone Number
E-Mail Address
Dear Lender Contact:
During the past few months our financial situation has declined significantly as a result of (a job loss, the death of a spouse, a major income reduction, etc.). The result is that in good faith we are no longer able to make full and timely mortgage payments.
We are keenly aware that real estate values have fallen in our community and so the option of simply selling the property and repaying our mortgage is off the table. The current loan balance is greater than the value of the property which means whether the property is sold on the open market or foreclosed there will be a loss.
Our question is this: How can we work with you to prevent or minimize the loss which otherwise looms ahead for us both?
For instance, could current loan payments be deferred until the end of the loan term? Can we obtain a mortgage modification under the government’s Making Home Affordable program? Is there a state program which could help in our situation?
We are prepared to provide (or we have attached) complete documentation regarding our current income and financial situation as well as past tax returns, account statements and such other paperwork as you may require.
Thank you for your consideration during this difficult time.
Sincerely,
Mr. & Mrs. Robert Jones
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