How to Write a Short Sale Hardship Letter (with Sample) Use this sample short sale hardship letter as a template for your formal hardship letter.
If a homeowner needs to execute a short sale of their home or other property in order to relieve some of their debt, the real estate agent may require a short sale hardship letter as part of the process. A short sale is a real estate transaction in which the amount received for the sale of the property is less than the amount owed on the property.
If all of the lenders agree to accept less on their loans, a property may be sold short. This is one way for borrowers to avoid foreclosure. Some lenders require the borrower to fill out a prepared hardship form or statement, so the borrower should check with the lender before writing a letter.
A short sale hardship letter is written by the property owner to the lender to explain why the owner is behind on his or her mortgage payments. The letter should explain the circumstances why the borrower is in financial difficulties and clearly show their current financial situation. This type of hardship letter is part of the normal process and something the borrower must provide.
Along with the letter, the borrower may be asked to provide: • A financial statement • Bank statements • Tax returns • Salary stub
A hardship is usually circumstances that are beyond the control of the homeowner. These circumstances have put the homeowner in the position of not being able to make mortgage payments. There is no point in giving an explanation that does not conform to the accepted hardships. From the lender’s representative, either the applicant conforms or he or she does not.
Some, but not all, of the hardships that qualify for a short sale are: • Job transfer • Reduction of work hours or pay • Loss of job • Divorce or separation • Unexpected medical expenses for the homeowner or a family member • Reset of the adjustable interest rate • A natural disaster • Military service
Hardship letters for a short sale should be short, but there is some information that must be included. While a template may be used to copy the format, the letter must contain personal information that is relevant to the borrower’s financial situation.
These letters are seen by the lender’s loss mitigation representatives who may see hundreds of such letters. It is important for the hardship letter to be original and personal to attract the representative’s attention for a positive result.
Another important thing to include is a reason it is in the best interest of the lender to approve the short sale. The representative already knows it is in the best interest of the borrower to have a short sale, so it is recommended for the borrower to include a reason for the lender.
The letter should not be vague. For example, it should not say the borrower could not afford mortgage payments. It must give a specific reason why.
The letter should include:
• The borrower’s contact information, including name, address, phone number, email address, loan number and the date • The first paragraph should explain the purpose of the letter and how the borrower got into financial difficulties • The body of the letter should explain the hardship that led to financial difficulties. It should explain how the circumstances were beyond the borrower’s control, and how a short sale will help avoid foreclosure • The conclusion of the letter should clearly contain the borrower’s intention to live up to all of his or her financial obligations, and may state any attempts the borrower did to remedy the situation. However, it should also state that is it not possible to change the situation, and a short sale is the only way to avoid foreclosure
The letter should not include:
• Blaming the lender for the financial difficulties • Promising that the financial situation will improve soon • Mentioning access to funds that are not shown in the financial statements such as borrowing money from a relative The lender need not know if there is the possibility of money in the future • A longwinded explanation of their financial situation in an attempt to gain the sympathy of the lender
Below is a sample short sale hardship letter. It is a formal business letter and should have no spelling or grammatical errors. The letter should be sent along with any copies of required documents by registered mail with a return receipt requested. This will make sure the borrower has proof that the letter was received by the real estate agent or lender. Any enclosures such as bank statements or salary receipts should be copies and not original documents.
Short Sale Hardship Letter Sample Name of Borrower Address of Borrower City, State, Zip Code Loan Number
Name of Lender Address of Lender City, State, Zip Code
RE: Requesting short sale because of financial hardship
Name of Lender:
This letter is a formal request to short sell my house because of financial hardship. I have not been able to make my mortgage payments for the past six months because the company I was working for, Name of Company, downsized, and my position was eliminated. I found another job, but the salary is a third of my previous salary. If I can short sell my house, I can avoid foreclosure.
I would like to fulfill my financial obligations, but it has not been possible for the past six months, and a short sale seems to be the only solution. I also believe that a short sale is in your best interest, because the house is in good condition and you could sell it for market value rather than waiting for foreclosure and trying to sell a vacant house.
Thank you for considering my request. I am ready to cooperate with any instructions you may have. I can be reached at Phone Number or Email Address.
Sincerely, Signature of Borrower Printed Name of Borrower List of Enclosures