In order to successfully modify a loan for your client (or for yourself), you will need to write a good hardship letter to send to the lender along with the rest of the modification package documentation. Make sure to include the borrower’s name(s), the property address, the lender name, and the loan number at the top. In the body, state what kind of modification the borrower would like, the reason they fell behind, and why their situation is stabilized or better now.
Make the letter short and sweet. If the letter is too long, it will begin to sound like a sob story and could get skimmed or even ignored by the overworked people in the lender’s loss mitigation department. Also, for an extra personal touch, keep the voice in first person for the borrower (i.e. I, me, and we), and always have them sign it personally. Have them write it by hand on a blank sheet of paper even, as it will seem less likely to have come from you or a template (which it did), and more like it came from the heart.
Below is a sample template you can use with my permission. Just cut and paste the text into a Word document, fill in the blanks, and tailor it to your own borrower’s specific situation. You may even want to tweak the verbiage a bit, as the lenders will likely have seen many identical copies of just about every hardship letter you can find online.
Loan number: 99999999999
To Whom It May Concern:
This letter explains the unfortunate circumstances under which I fell behind on my mortgage. I’ve done everything I can to stay ahead, but I still fell behind. I would like to be considered for a loan modification to decrease my payments and interest rate to keep this from happening again, give me a fixed rate to prevent the payments from increasing down the road, and to recapitalize the delinquent payments. My number one goal is to keep this property for the long term.
I work as a (job) for (employer). In (month and year), I hit hard times financially because (hardship reason). Since that time, (reason hardship is over or at least stabilized). My income is now (back to normal, lower than before, whatever).
Despite my recent hardship and reduction in income, it is my full intention to pay what I owe. Now that (reason hardship is over), I would appreciate if you can work with me to lower or recapitalize the delinquent amount owed, lower my payments, and fix the rate for 30 years so that I can afford to keep this home for the long term and make amends with (lender name).
I pray you will work with me on this. I’d like to get it settled so we can both move forward without problems ever again.
(Client Name, typed)