Writing the Short Sale Hardship Letter

From EnlightenMe.com

A short sale hardship letter is a necessary document you must prepare and present to the mortgage holder when trying to short sale your property. Oftentimes, this letter is the determining factor in the lien holder accepting or rejecting the offer.

Short Sale Defined

A short sale occurs when a homeowner sells his or her property for less than the amount remaining on a mortgage. It is a way to avoid foreclosure and the negative impact foreclosure has on a credit rating. There is still a negative result, but it is not as severe. The homeowner will not make any money on the transaction.

Writing the hardship letter

You are trying to convince the lending institution that the short sale is the only way to avoid foreclosure or even bankruptcy. In so doing, you are demonstrating that even though the bank will receive less than the amount of the loan, they will save money in the end by avoiding the costs of the foreclosure process. They may appear to be so at times, but banks and their officers are not cold and heartless and they do want their interests served.

• To begin with, make a list of every single reason why you cannot meet your mortgage obligations. Be truthful. Once you have finished the list go through and remove any reason listed that was your fault or you could have controlled. Lenders will not be sympathetic to criminal behavior or that around the world trip you took.
• Next, pick out the three most pressing issues that genuinely contribute to your problems – job loss, illness, divorce, and such. Take the time to explain each of these situations fully and completely. Include as much information about how these events had an impact on your decline in income and ability to make payments on the mortgage.
• Keep this letter to a single page. Use standard business letter structure, and keep your paragraphs flush left. Type it if you can.
• In the opening paragraph, state that a change has occurred and it has had a negative impact on your ability to pay your mortgage.
• In the next three paragraphs, explain each of the reasons (one per paragraph,the most powerful one first). State the problem, then explain the impact and how it affected you.
• In the closing paragraph state in no uncertain terms that you cannot pay, have no more options available, and it is necessary to short sale the property. Be clear.
• Then sign and date the document and give it to the lender, your attorney, or your short sale agent.

The lender is not obligated to accept the arrangement. However, if you have done your homework and craft a well-written letter, you should be able to complete the transaction.