Yes, it's possible, usually the easiest way to do this is with a plugin. There are a few out there that handle document merging. I prefer scribe by 360works:
It supports the ability to read and write from filemaker to PDF forms, word documents and excel files.
Basically you would store any letter templates you need in filemaker container fields in a "templates" table, then write a script that loads that template, merges the data from your filemaker record, and then exports/opens the document.
Scribe has a free trial and a demo file so you can evaluate it's functionality. It also has a server edition if you want to centralize it for multiple users.
There are also other plugins that can do it, and possibly other non-plugin methods as well. The above is the easiest implementation I've run across though.
Thanks for pointing me in that direction.