A loan workout is a series of steps taken by a lender with a borrower to resolve the problem of delinquent loan payments. Steps can include rescheduling loan payments into lower installments over a longer period of time so that the entire outstanding principal is eventually repaid. One of the items lenders often ask for during the loan workout or loan modification process is a hardship letter. A hardship letter is a written explanation as to what has caused you to fall behind on your mortgage. Some of the hardships that that lenders consider during the loan workout process are the following: Illness; Loss of Job; Reduced Income; Failed Business; Job Relocation; Death of Spouse or Co-Borrower; Incarceration; Divorce; Military Duty; and Damage to Property (e.g., natural disaster or fire).
Title: Indiana Request for Loan Modification Due to Financial Hardship — Switching from Adjustable Rate to Fixed Rate Request Introduction: Indiana residents facing financial hardship may need to explore options to make their mortgage more affordable. One potential solution is to request a loan modification from their lender or loan service. This letter serves as a detailed description of an Indiana borrower's request for a modification, specifically changing the adjustable interest rate to a fixed rate due to financial hardship. Content: I. Addressing the Lender or Loan Service: — The Indiana borrower must identify the lender or loan service by name and address. — Greetings and introduction to the letter. II. Explanation of Financial Hardship: — Provide a thorough description of the hardships faced by the Indiana borrower, such as loss of employment, medical expenses, or other relevant reasons. — Mention any changes in income or significant life events that contribute to the current financial difficulties. — Emphasize the borrower's commitment to maintaining homeownership and willingness to take necessary measures to resolve the issue. III. Loan Information: — Clearly state the loan details, including the loan number, property address, and current loan terms. — Specify the original terms of the adjustable interest rate, including when the rate is expected to adjust and how frequently. — Highlight any concerns or challenges the borrower anticipates with the upcoming adjustment(s), especially if it could exacerbate their financial distress. IV. Request for Loan Modification: — Express the desire to modify the loan to a fixed interest rate for the purpose of stabilizing monthly mortgage payments. — Explain why switching to a fixed rate will alleviate financial hardship and provide a more affordable and predictable payment structure. — Demonstrate knowledge of alternative loan programs, particularly those aimed at helping homeowners in challenging financial situations, such as government-backed loan modification programs. V. Documentation of Financial Hardship: — Enclose supporting documents to substantiate the financial hardship, including but not limited to: — Copies of recent pay stub— - Proof of unemployment benefits — Bank statements showcasing reduced income or increased expenses — Medical bills or records confirming health-related expenses — Any relevant legal documents related to the hardship VI. Contact Information: — Provide the borrower's full name, address, contact number, and email address. — Request that the lender or loaserviceer contact the borrower using the provided contact information to discuss the loan modification request further. — Include any preferred methods of communication if applicable. Conclusion: — Express gratitude to the lender or loan service for their attention and consideration of the borrower's request. — Reiterate the borrower's sincere commitment to resolving their financial hardship and maintaining their homeownership. — Encourage prompt response to ensure timely resolution. Variations: — Indiana Request for Loan Modification Due to Financial Hardship — Requesting Extension of Loan Term— - Indiana Request for Loan Modification Due to Financial Hardship — Requesting Principal Balance Reduction. — Indiana Request for Loan Modification Due to Financial Hardship — Requesting Temporary Forbearance Agreement.
