Writing A Short Sale Hardship Letter

July 24, 2011

Short Sale Guides

When approaching your lender about listing your home in a short sale you will always be required to submit a hardship letter. Suffering a hardship is one of the qualifiers lenders use to determine if they will allow you to sell via a short sale. So what qualifies as a hardship? They are typically life changing events that don’t happen often although they don’t always have to be that is up to your lender. I will list some examples of hardships below:

  • Divorce or separation.
  • The death of a family member or your significant other which were contributors to the loan payment. This typically only applies to family members who were actively involved with paying the loan.
  • If you are in the military and are called to duty. This is not always a guarantee but most will consider this reason.
  • Job relocation. This must be due to your employer moving your job somewhere else and there will also be a range requirement. You must move a certain distance away from your current location.
  • A sudden increase in debts. This could be caused by an illness of you or your spouse.
  • A significant reduction in your income. Again, this could be caused by an illness, loss of job, or a decrease in available hours at your employer.
  • A sudden increase in your expenses caused by anything previously mentioned in the other points.

As you can see it’s not that simple to just say you’re going to sell your home in a short sale to get from underneath the negative equity. I’d imagine some lenders are being a bit more lenient when it comes to hardships these days. With the housing market performing subpar they may ease up just a bit.

When writing the letter you must do the following:

  • State the legitimate, special circumstances which have caused you to fall behind on your house payments.
  • Explain your current situation and what you are doing to try and get back on your feet.
  • Don’t make your situation worse, by complaining to them.
  • Be honest and represent the facts clearly.

All of the above is what your letter should contain but just knowing what you need isn’t going to be enough. You need to know how to write the letter to get the best possible response from your lender. There is a great tutorial I recommend which will show you exactly how to structure your letter to get approval. If you are interested in the tutorial you can CLICK HERE to see if it’s something you would be interested in.

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