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Sample Loan Modification Hardship Letter
The loan modification process can be quite intimidating. You have to fill out all kinds of paperwork, negotiate on terms with your lender, as well as write a letter stating hardship. Out of those three main steps, the letter is the most difficult to do on your own. To give you an idea of how your hardship letter should look, here is a sample loan modification hardship letter to give you some guidance:
To Whom It May Concern:
This letter is to formally follow up on my application for loan modification I sent in to you last week. The application states what we had and what we are looking for, but obviously does not go into how exactly we got into the situation we are in now.
There were severe cutbacks at my job in November and I was transferred to a lower paying position in the middle of other people getting laid off. I should be grateful, but the salary I receive in this position is ¾ of what I was previously making. It had gotten to a point where we were pulling from our savings and scraping change to be able to make our mortgage payments and pay the bills. Two months ago our interest rate went up from 7.45% to 10.35% as we have not been able to manage and keep up with our payments since.
I would like to request our interest rate be lowered to anywhere from 7.25% to 8.40%. We feel this is a fair number to both parties. We were always punctual with our payments before my demotion and my wife is due for a raise next month. We are willing to work with you in finding a compromise that we can both agree on.
Sincerely,
Your Name
It’s important to stick to the facts in these letters, and this sample loan modification hardship letter does not veer off from the point: I simply cannot afford the high interest rate in my current situation. Be sure you mention why you are having problems with your payments and make it clear that there is no way for you to be able to manage as you are now.
Also be sure to mention the rate you would like. Your lender doesn’t have time to sift through every application and determine the exact rates they want.
Stating the interest rate you’re looking for gives them even more of a reason to accept you, because you have determined the interest rate you can handle on your own. It also shows that you are worried enough to have done the work to determine your ideal rate. Use this sample loan modification hardship letter as an example and work around it. A good letter can make all the difference.
How to Get Financing in Texas
Are you in the mood for a new car but cant get that car loan? Is your husband ready to purchase that new boat but cant get a boat loan? Would you like to use your home equity to pay off some bills, make an investment, or take a much needed vacation? You may say yes to any or all of these questions. But every bank you visit says no to your request for financing.
In the current US economic crisis more and more people are having difficulty getting the financing they need. Many of them have good or perfect credit. But banks across the nation are hesitant to lend regardless of the credit score. Texas banks are no different. Not only are Texas banks suffering from the same issues as other US and world banks but they are also reluctant to extend credit to customers. Since much of the system is fueled by credit flow how is one to obtain a loan during this crisis?
This does NOT mean that you will not be able to get a loan. It just means that you may need to invest a little more effort before you are able to get that loan. There are many things you can do to improve your chances of getting a loan:
First, take some time to consider your current credit situation and personal finances. There are many services that offer free credit report analysis. You should thoroughly examine your credit report. Look for any discrepancies or negative postings. Work tirelessly to correct them.
Next, be sure that your overall debt is minimal or nonexistent. The less debt you owe the more attractive to a lending institution you will be. Contrary to popular opinions there is no such thing as good debt. One of your highest priorities should be to decrease your income to debt ratio.
Finally, avoid using your retirement or savings for collateral. Cash on hand is always attractive to banks. Many institutions may require you to secure a loan with your savings or other cash. But try to avoid this. The amount of money you lose when you withdraw your retirement early is HUGE! Do anything you can to avoid this as you can count on almost 50% of the total amount to be taken away in penalty fees and taxes. When you consider this, it may be worth waiting a few more months before getting that loan.
There may be many banks in Texas that are not lending. But there are a few that are able to lend due to the federal funds extended to them. Credit unions are also a good place to find financing. If your credit situation is such that you can easily qualify for a personal loan then keep shopping around until you find the right institution for you. Ask more questions up front so that your time is not wasted. Keep your patience in full effect and eventually you will be able to get that new car, new boat, or take that long awaited vacation.