Loan Modification for Financial Hardships

A loan modification can be the answer if you are having a financial hardship.

A hardship is a situation that directly affects your ability to make timely payments on your loan. You must provide evidence of your hardship when submitting a loan modification package to your lender.

A modification is when the terms of the original loan contract are changed to provide a more affordable payment for a borrower. Under a modification agreement, the lender could extend the length of the loan, lower the interest rate, or reduce the balance of the principle.

The keys to writing an effective and persuasive hardship letter are truthfully explaining why you cannot make your payments, positioning yourself as reasonable and responsible with the bank as your highest priority, and clearly requesting help from creditors to correct the situation.

It is important to show consideration towards the bank in your letter. The lender wants to see that you are making every possible effort to get your payments back on track.

Acceptable hardships generally include but are not limited to:

  • Adjustable-rate or unaffordable mortgages
  • Illness or death of borrower or family member
  • Decrease but not loss of income
  • Job loss of one borrower
  • Important property repairs
  • Inability to sell or rent property
  • Divorce or marital separation
  • Property damage from a natural disaster

Unacceptable hardships generally include but are not limited to:

  • Lost property value
  • Children’s education
  • Other debt (credit card, car loan, etc.)
  • Minimal income from rental property

If you’re having a financial hardship, a loan modification can reduce your monthly payments.

Contact SKB if you have questions about your situation or whether you qualify for loan modification.