How to write a short sale hardship letter

When you need to short sale your home, you must prove to your lender that you really can’t afford your home anymore and must sell it or let them foreclose. Banks do not like losing money and they need a good reason to approve your short sale and forgive your delinquencies.

Because they need convincing,  you need to include a hardship letter in your short sale documents.  This letter explains to your lender why you cannot make your mortgage payments, are trying to find a buyer for your home and avoid foreclosure. Hardship letters are essential to  getting your short sale approved.

How do I write a hardship letter? Your real estate agent should have some advice on this subject (I hope) but here are a few tips and guidelines to keep in mind as you are writing your hardship letter.

  • Write your letter yourself. Banks do not want to see canned or pre-written hardship letters.  Writing it yourself lends credibility and sincerity to your situation.
  • Explain your circumstances clearly. Is it a job loss, an illness, a divorce, or something else that is keeping you from making the payments?   Whatever the reason, be prepared to back them up with documentation of reduced income.
  • Emphasize that you are trying to avoid bankruptcy. Bankruptcy proceedings tie up properties for months and complicate the issues, banks don’t like that.
  • What ever you do, don’t blame your lender! They constantly are hearing how they have caused the problem and even if you feel they have taken advantage of you, remember that you are asking for their assistance.
  • Ask for what you want. Tell them up front you want a short sale approval. Don’t forget to ask them to forgive any deficiency amount that might arise.

Remember that lenders are in the business of making money, and they normally understand that doing a short sale is preferable to foreclosing on a home.  You simply need to remember that somewhere in an office is a person who wants to be treated with respect just like anyone else and they have the power to approve or decline the sale of your home. You don’t have to kiss up to them, but being honest, factual and respectful in your short sale hardship letter will go a long way in convincing them to approve your short sale.