The Hardship Letter
The Hardship Letter is an integral part of the short sale package and should be written by the seller and NOT their representative. It is used to explain to the lender the reasons for the borrower's need for a short sale. Reasons such as divorce, job loss, medical issues, etc. can and should be included. Usually just a one page letter with the pertinent information will suffice however if your letter makes them cry it's even better!
I'll provide some examples over the next few pages however a simple letter in the following form should suffice:
Date
Lender Name
Address
Loan Number
Dear Sir/Madam,
{Explain your hardship and why you must utilize a short sale - some example hardship reasons are listed below}
Unemployment
Reduced Income
Divorce
Medical Bills
Too Much Debt
Death of my Spouse
Death of a family member
Payment Increase
Business Failure
Job Relocation
Illness
Military Service
Incarceration
Other (Please Specify)
Borrower's Signature Date
Co-borrower's Signature Date
Hardship Letter Example #1
To whom it may concern:
I purchased my home at _____________ in ___________. At that time I was employed by _______and business was very good. My salary and the possibility of a promotion and raise made me sure that I could easily support my mortgage. Unfortunately, a downturn in the market caused my company to reduce its workforce and I was laid off.
After searching for a comparable job, I finally got a temporary position as an office assistant as I continuing seeking other work. I struggled for several months to make my mortgage payment, and was also hit with some medical payments that I did not expect (the COBRA payment was more than twice what I was paying when employed). I knew I would have to sell my home to protect my credit rating and possibly have enough cash left over for moving expenses and some savings. I put my home up for sale by owner in _________, but there were several problems that I did not have enough money to fix, such as the broken fence in the back yard and some pretty severe leaks in the roof which indicated a new one was needed. Over the next three months I lowered the price three times but still had no takers. I am now working with a real estate agent and I believe she will be able to help me sell quickly.
I really love my house, but I know that I cannot afford it. I am a single parent, working as a temporary employee with few benefits and no savings. My financial situation cannot sustain a home mortgage of nearly $2200 per month. I want to sell the home, avoid foreclosure and salvage my credit. I know that a foreclosure on my record will affect me for years to come. I would ask that you please assist me in avoiding this.
Please accept this offer as payment in full. My attorney has advised me to file bankruptcy, but I prefer to avoid further destruction of my credit. I just want to move on and start over.
I deeply appreciate your help and understanding in this matter. If you have any questions, or need anything further from me, please contact my agent or me personally.
Sincerely,
Home Owner Name
Address and Contact Information
Hardship Letter Example #2
To Whom It May Concern:
I am writing this letter to explain the unfortunate set of circumstances that has caused us to become delinquent on our mortgage. We have done everything in our power to make ends meet. But unfortunately, we have fallen short and would like you to consider working with us to allow a short sale. We would really appreciate the opportunity to work with you on this matter.
The main reason that caused us to be late is (insert your reason here and be concise and to the point). With our income not being nearly enough, we had fallen further and further behind. It is our full intention to pay what we owe. However, it's now to the point where we cannot afford our current payments. We have exhausted all of our income and resources so we are turning to you for help.
(State the approximate date and circumstances of your hardship and whether or not your situation is temporary or will be permanent.)
We feel that a loan modification (or short sale) would benefit us both. We would appreciate if you can work with us to lower the monthly payment so we can keep our home and also afford to make amends with your firm (or agree to a short sale).
We truly hope that you will consider working with us and we are looking forward to settling this so we all can move on.
Sincerely and Respectfully,
Your Signature
Date
Hardship Letter Example #3
Dear Sir/Madam,
This letter is a request for your cooperation in a "short sale" of our home located at ___________________.
[Sample text regarding reason for request: My husband has been laid off from his job because of a work injury. He worked at Acme Manufacturers for twenty-five years. On June 15, 2006 a forklift ran over his foot and he has not been able to work since then. He receives $2,200 disability every month.]
I work at ______________ but only make ___________a month. Combined we both take home _________ which is not enough to cover our bills and the house payment.
The house is vacant. We are living with my elderly parents.
We have a real estate agent and she has found a buyer for the property with a purchase agreement offer of $__________ (its current market value). This offer will not be enough to pay off our existing first and second loans on the property. It is a good offer and the buyer is anxious but I will need both the first and second existing lenders on the property to agree to cooperate in a short sale and therefore accept short payoffs.
Attached is my written authorization for you to speak with my real estate agent, ___________and my escrow officer, __________, at _____________Title Company about this matter. [Ask your real estate agent and escrow officer for their forms.]
I have enclosed a Borrower's Financial Statement and Explanation of Hardship Form for your consideration. [You should ask for these forms from the lender.]
Thank you for your prompt attention to this matter.
Sincerely,
Your Signature
Date
Great article Joe
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