Hardship Letter Example
A hardship letter is one of the most important components of a successfully executed short sale package. In order to be considered for a short sale, a borrower must present a very convincing case to his lender. To be taken seriously, he has to put together a short sale package that includes evidence as to how he ended up under-water with his mortgage. The hardship letter is the document that tires all of that evidence together, giving the lender a concise snapshot of the problem and a summary of what the borrower is offering. An example of a quality hardship letter can be found below.
Items to Include in a Hardship Letter
These days, lenders are being inundated with hardship letters and short sale packages. For that reason, brevity is key. First-rate hardship letters explain the issue at hand without going off on tangents. They revolve around the specific reasons for a borrower's inability to pay his mortgage as agreed. Reasonable explanations to outline in a hardship letter include:
Illness
Job loss
Job relocation
Failed business
Reduced income
Medical bills
Death of spouse
Death in the family
Divorce
Marital Separation
Incarceration
Military duty
Damage to property
Example of a Hardship Letter
The following is a generic example of a well-executed hardship letter. It is short and easy to scan, while providing specific and concrete explanations about why the hardship exists. Borrowers should use this example as an outline for creating their own letters, while making it less generic and more germane to their own specific situations.
(DATE)
(NAME OF LENDER)
(ADDRESS OF LENDER)
(FAX NUMBER OF LENDER)
RE: Hardship Letter for Short Sale of (BORROWER ADDRESS)
To Whom it May Concern:
For the last (SPECIFIC LENGTH OF TIME), I have been having serious financial difficulties. These difficulties have primarily been brought about due to (SPECIFIC LIST OF PROBLEMS - go into greater detail if some of them are not self-explanatory).
Although I have looked for solutions to the current problem, I have finally come to the conclusion that there is no reasonable way for me to continue complying with the original terms of the loan agreement. In addition to the problems that I have outlined above, the current economic crisis has caused me to be under-water with my loan. Even if I try to sell my home, I will do so at a considerable loss - and I have no way to make up for that loss.
At this point, I am asking you for help in order to avoid the foreclosure of my home. I would like to be considered for a short sale. That way, the price of my home can be lowered and I'll be able to sell it before it goes into foreclosure. You'll benefit from the arrangement by receiving the majority of my original financial obligation; I'll benefit by avoiding foreclosure and, possibly, bankruptcy.
I have enclosed several documents to substantiate my case. They include (LIST OF DOCUMENTS THAT WILL BE INCLUDED WITH SHORT SALE PACKAGE).
I, (BORROWER'S NAME), confirm that all of the information that's outlined in this letter is true, to the best of my knowledge. If you have any questions or require additional information from me, please call me at (PHONE NUMBER).
Sincerely,
(BORROWER'S NAME)
At most, a hardship letter should be one to two pages long. Ideally, the outlined documents should be listed in the same order in which they appear in the short sale package. By being as methodical and concise as possible, a borrower increases his odds of having his short sale request approved - and of avoiding a foreclosure, too.