Your hardship letter is a very important part of obtaining a short sale payoff for your mortgage(s). The lender will want to be provided with a timeline and details of your hardship. Some people recommend that your hardship letter be handwritten, but that makes editing so difficult and, it is the modern age after all, so feel free to use your computer. But sign and date the hardship letter yourself, don't rely on digital signatures for such a personal letter.
Here is a list of items that you SHOULD mention in your hardship letter:
- Hardships. What are your hardships? Are they previous hardships or current and ongoing hardships? Not all hardships are financial - you can have medical hardships, emotional hardships, situational hardships, etc. An example would be unemployment, reduced income, divorce, illness, family member's death or illness, or being required to relocate for your employment.
- You will need to detail the reasons that you fell behind on your mortgage payments and why you believe you will never be able to catch up on the payments.
- Be very clear and concise about what you want. If this is a short sale hardship letter, state, "I would like to short sale my home."
Here is a list of items that you SHOULD NOT mention in your hardship letter:
- Your life story. There's really no need for a long or detailed explanation of your entire life. The lender is reading your letter in order to categorize your hardship; too much detail makes it difficult to read and pinpoint your situation.
- Personal benefits from a short sale. Will you, personally, benefit if you short sale your home? Of course you will! But don't focus on that; focus on the fact that you are trying to make the best of a bad situation for all parties involved by avoiding foreclosure.
- Details of every asset that you've drained in an attempt to pay your mortgage. It's best not to mention any specific actions that you have taken or plan on taking to pay the mortgage.
Other Important Guidelines for your hardship letter:
- Be polite and ask for their consideration. Keep in mind that your lender is not required to approve your short sale, therefore your tone and cooperative manner will help influence the lender to approve the sale.
- The hardship letter MUST be in English.
- Keep it to the point. Detail your hardship and ask for a short sale. It's that simple. If your hardship letter is more than a page long, it's probably too long.
Sample Hardship Letter:
Here is an excellent example of a hardship letter, composed from multiple sources and then edited by yours truly. I've seen a TON of short sale hardship letters, and this sample hardship letter sums it up nicely, with the perfect amount of detail (not too little, not too much). I hope it helps!
To Whom it May Concern:
I have been unable to make my mortgage payments on my house and I am now facing foreclosure. My inability to keep up with the monthly mortgage payments is the result of a combination of factors.
Primarily, the severe illness and eventual death of my father put a financial and psychological strain on myself and my family members. During his illness, my father lived here in my home so that we could care for him around the clock. Upon his passing, we were left with the residual costs of his illness in addition to his funeral and burial costs. Additionally, I had a swift and steep decline in my income due to the fact that less people are purchasing from my company because of the current state of the economy. Lastly, the unthinkable happened when my wife was laid off in February 2010 due to company cutbacks and budget restraints. A tthis point, we have no more assets to use to pay our mortgage. My reduced income is barely enough to provide for my family and I fear that a short sale is our last resort.
In spite of my current financial difficulties, I am trying to maintain a positive attitude. I have done my best to continue making my mortgage payments, but at this point in time I do not feel that it is possible any longer. This was never my intention and I feel sad, embarassed and humiliated to be selling the house that has been our home for so long.
When I purchased this house in 2001, nobody would have predicted that we would be in a housing crisis of this magnitude and I am asking that you allow me the opportunity to work with you on a short sale. I truly feel that a short sale is the best option available to all parties involved.
I can't thank you enough for your help and consideration in this matter.
Sincerely,
YOUR HAND-SIGNED NAME AND DATE
YOUR HAND-PRINTED NAME
See? That wasn't so bad, was it? Hardship letters aren't as tough as they're made out to be. Study my tips above, and follow the basic outline of this sample hardship letter and you should be just fine.