How to Write a Short Sale Hardship Letter
What is a Hardship Letter?
A hardship letter is the first step in the short sale process. It’s a formal statement written by you, declaring to the bank that you can no longer make mortgage payments and request to do a short sale on your property. It should include the reason why you’re no longer able to make mortgage payments, and include financial evidence. However, the “reason” why you cannot make mortgage payments doesn’t have to be financial. Hardships like unemployment, medical expenses, and possible military service are valid reasons why someone may no longer be able to make payments.
To start the short sale process, the bank or mortgage lender will evaluate your situation (stated in the hardship letter) and determine if a short sale is necessary.
How to Write a Hardship Letter
Think of it as a regular letter. You are addressing the mortgage holder and explaining why you can no longer make mortgage payments. Keep it simple and concise. Start with your current situation, telling why you are experiencing hardship and how it’s affected your payments. Use factual evidence, as the bank will check on it. Don’t complain, but do ask the bank to initiate a short sale with your property. Overall, you’re convincing them they will lose money if you go into foreclosure.
The Hardship Letter should:
- State the legitimate, special circumstances which have caused you to fall behind on payments
- Explain your current situation and what you’re doing to get out of it
- Don’t complain – it will only make things worse
- Be honest and use facts about your financial situation
A Sample Short Sale Hardship Letter
Dear (Mortgage Lender),
We purchased our property in (date), hoping to call it home for a long time. Unfortunately, due to circumstances beyond our control, we are no longer able to pay our current mortgage payment.
With our family’s loss of employment, our income level has dropped dramatically, leaving us unable to fulfill our financial dues. And the inability to find new jobs has severely affected any chance of renewing payments. We are trying our best to support our family’s needs, such as purchasing food, leaving us no choice but to request a short sale. (Continue explaining what caused your hardship. Every situation is different.)
Enclosed, pleased find copies of our financial statements (include proof of financial hardship or any other hardship, such as: unpaid bills, late notices, tax returns, and loss in income). As you can see in the documents, our home has lost 30% of the value since we bought it. The little equity we built up is no longer there. Our realtor has advised us that a short sale is our best course of action, and we agree.
We appreciate any effort you can make to help our family through this situation. You may contact our Realtor (Give name and contact information) to discuss the current real estate market in our area and any information you may need from them concerning the sale of our home.
I (Home Owner Name/Co-Signer Name), state that the information stated above is true and correct to the best of my knowledge.
(Home Owner Name)
(Mortgage Account #)
More Information About the Short Sale Process