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2017-11-25 23:08:37
How to Write the Short Sale Hardship Letter

hardship_letter_200First, if you’re currently involved in a short sale, and your listing agent isn’t assisting you in writing your short sale hardship letter, you need a new agent. This letter is critical to persuading the lender to allow a short sale of your home. A seasoned short sale professional understands this and offers advice on how to put together the short sale hardship letter. 

If you thought you were down in the dumps over the fact that your house is worth less than what you owe on it, wait until you write your short sale hardship letter to the lender. Once it’s finished, though, and on the desk of the loss mitigator at the bank, you can breathe a sigh of relief, realizing you are one step closer to moving on with your life.

A short sale hardship letter is, simply, an explanation of why you need to sell the house (the hardship).  There is a simple formula that works with all the lenders.  It is 3 paragraphs long, starting with where you were financially and emotionally when you purchased the home, what you have tried to do to keep your home, and where you are now. 

Keep in mind while writing the letter that the bank is only interested in numbers. Although your hardship may be sad or compelling, the bottom line for the lender is dollars and sense, not sympathy. So, while the letter shouldn’t be maudlin, it should express, in very convincing terms, the hardship that brought you to this point. 

Now, what you consider a hardship, the bank may not, so determine beforehand if what you are going through is a legitimate reason for your lender to approve a short sale to avoid having to take the house back in foreclosure. 

A few of the hardships typically accepted include: 

  • A death or chronic illness of the mortgagor or an immediate family member.
  • Income cutback, loss or job relocation
  • Incarceration of the principle mortgager
  • Divorce
  • Military transfer
  • Loss due to natural disaster 

When you compose the letter, 

First, explain where you were financially and the plans you had for the property when you purchased it. “We had hoped to keep this home to retire in.“ “We had finally purchased our vacation home that we had planned on our entire lives.“  

Secondly, explain how the hardship has affected your ability to pay your mortgage, not how the hardship came about. For instance, it is sufficient to state: “I was laid off from my job on (date).” There is no need to explain the problems your employer was having that led up to her need to lay you off. If you were fired, say that and avoid explaining why you were fired. 

Lastly, how the hardship has impacted your finances, and why a Short Sale is the ONLY option left for you.   “My income has fallen x dollars a month to z dollars a month.” Or “During the course of diagnoses and treatment I have incurred x dollars in medical bills.” “Before my husband’s death our mortgage payment was 36 percent of our household income. At this point, the mortgage payment is 76 percent of my household’s income.” 

Proofread your letter to make sure that it isn’t redundant and that it is compelling and persuasive. Ask your real estate agent to read it as well and ask for suggestions on how to improve it.  This is another reason to choose an experienced Short Sale List Agent. 

Write your loan number at the top right hand corner of your Hardship Letter and give it to your List Agent.  Your Agent will include your Letter in her Short Sale Pkg. for submission to the Lender upon execution of a solid offer.

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