You can request a hardship loan modification by writing a letter to the bank who holds the mortgage and outlining a clear picture of your present financial situation, AllLaw advises. Explain the circumstances that contributed to your financial difficulties. Some hardship situations include military service, excessive medical bills or natural disasters.
A hardship loan modification is a change in one or more of the terms of your mortgage loans, according to the U.S. Department of Housing and Urban Development. The modification reorganizes the mortgage and gives you the opportunity to have payments you can better manage financially. You work with the lender to find a monthly payment amount that satisfies both you and your lender. When determining if you qualify for a hardship modification, your lender looks at any continuous income you have, such as wages, Social Security benefits and pensions.
When you request a hardship loan modification, your interest rate may change based on what you can afford, notes HUD. The lender might assess closing fees and other charges, but many times, these fees can go into the loan principal, depending on the policies of your lender. If you qualify for a hardship loan modification, your lender may waive any accumulated late fees.