Writing a hardship letter
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Equal Opportunity Housing REALTOR

How To Write A Hardship Letter

The short sale process has many steps that must be carefully followed in order to better the homeowners chances of a short sale approval. Aside from hiring an experienced short sale specialist, the short sale package is one of the most important steps to the short sale process. The contents within the short sale package are made up of financial documentation like bank stubs and W-2s along with a hardship letter. The short sale package plays a crucial role in a short sale because it provides validity of the homeowners financial hardship.

In the hardship letter, an explanation of how the hardship came about and all steps that may have been taken before you went to the lender about a short sale should be included. The key is to thoroughly explain what exactly about your financial situation has changed since you purchased the property or last refinanced it. It might become easy to let yourself go on and on about your hardship within the letter, but do keep in mind that the processor who is reviewing your file is probably dealing with dozens of other short sales. That being said, it is important to be sure to keep your letter appealing to the eye, brief and well organized.

What are typically accepted financial hardships?

  • Loss of income, reduction in pay, or loss of employment
  • Relocation or job transfer
  • Increased bills or expenses
  • Death of a family member
  • Divorce or separation
  • Major repairs needed on the property without the resources to pay for them

The above are examples are several of the most common and typically accepted financial hardships, however many situations are unique and the list is not complete. Within the hardship letter there are certain things it should and should not contain, such as:

  • The hardship letter should be signed and dated by all parties on the loan.
  • The property address as well as the loan number should be referenced in the header.
  • You should give a brief explanation of your hardship and what caused you to no longer be able to afford your home.
  • You should make a strong case and convince your lender the desperation of your situation.
  • You should not blame your lender in any way for your particular situation. They are doing you a favor by allowing a short sale and hopefully forgiving you of your debt free and clear.
  • Your hardship letter should not be so long that the lender will not have time to read it all. Three to four paragraphs is typically more than enough to properly relay your situation and is brief and concise enough to where your lender will likely actually read it.
  • You should end your letter with a statement that pleads for a short sale being your only solution to avoid foreclosure.

A hardship letter is a way for the homeowner to let their lender know everything with just a pen and some paper. It might be a good idea to make an outline before writing the hardship letter in order to refrain from repetitiveness and unorganized writing.

It is very important to sign, date and add the loan number to the hardship letter so that the lender is fully aware of who it came from and to prevent the possibility of the hardship letter being misplaced. Should your hardship letter be misplaced, your short sale could be delayed or even rejected.

Within your letter, be sure to tell your lender how desperate you are for a short sale and that no other options have worked. Include numbers; how much debt you went into by running up your credit card, or how much you owe on your vehicle because you have not been able to make the payments, or that every night you wonder how your kids will eat! Whatever the dire circumstances are, tell them. Lenders are usually ready to approve a short sale if all ducks are lined up because they too, can avoid foreclosure and the costliness it will bring.

When it comes time to end your letter be sure to include a sincerely (your name), for it is a genuine statement and a pleasant close to a hardship letter.