How to Write a Hardship Letter for a Short Sale

How to Write a Hardship Letter for a Short Sale

In a short sale, the owner of the home has put the home on the market because he/she is no longer able to keep up with the payments, and has found a seller who will purchase the home for a certain price, but that price is less than what the current owner still owes for his/her mortgage. In other words, the homeowner will be "short" in paying back the lender. A lender may be willing to accept a short sale because a foreclosure, which is the other option, costs the lender money and is generally a hassle for everyone involved. Part of the process of getting your lender to accept a short sale is writing a hardship letter, which outlines the reasons why the short sale is the only option left for the homeowner.

Here are a few tips to follow when writing this hardship letter:

1. Give a bit of history. Explain to the lender when you bought the house, what the original mortgage amount was, and how it was that you were able to make your payments originally.

2. Tell them about the present. Explain to the lender that in your current situation it is impossible for you to continue to make your mortgage payments. Be specific about what led to this situation, and where the money you have now is going each month. Include any relevant financial statements that detail your situation.

3. Give your solution. Explain to the lender that you have made every effort to make these payments, and in order to avoid foreclosure, you have placed your home on the market. Indicate when the home went on the market, what the original asking price was, and why you have had to reduce that price. Give details about the potential buyer who will buy the house at the reduced price, and request that the lender accept this offer so that all parties can move on from this situation.

4. Be gracious and remorseful. The lender wants to know that you are doing the best you can, that you didn't intend to get into this situation, and that you are willing to do whatever you can to rectify it.