Writing a short sale hardship letter to your lender lets your lender know about your financial hardship and shows your lender you are serious about resolving your situation. While you will not be able to keep your home with a short sale, you will avoid foreclosure on your credit. It’s important to negotiate with your lender in writing that your short sale satisfies all your mortgage debt so the lender cannot obtain a deficiency judgment for any balance owed on your loan after the sale. You may want to speak with a foreclosure defense attorney to assist you with the short sale process.
Effective Letter
You must convince your lender that you have a legitimate hardship, and can no longer afford to make your mortgage payments to keep your home. The other point that you need to get across is that your home’s value has declined as a result of the current down market conditions, and you are unable to sell your home to pay off your mortgage debt. Be sure to provide the lender with a comparative market analysis prepared by a local Realtor showing the recent sold prices of comparable homes in your area. Realtors prepare them at no charge. Make sure to provide all the information requested by your lender, or they won’t approve your short sale. By following these tips, you should be able to write a convincing hardship letter and get your short sale approved.
What to Include in your Letter?
Include the following information in your letter:
- Your name and contact information.
- Loan number.
- Names of all other borrowers and their contact information.
- Detailed reason for your hardship. Provide supporting financial documentation including paycheck stubs, tax returns, bank statements, W-‘s or 1099. Typical short sale hardships include loss of income, loss of job, disability, divorce, death or natural disaster.
- Be clear that you are requesting a short sale because you can no longer afford your mortgage payments as a result of your financial hardship and that your home values have declined making it impossible for you to sell your home. Attach a comparable market survey showing recent sold properties in your area.
- Provide the name, address and telephone number of your authorized representative. This is usually your attorney, Realtor or short sale negotiator.
- Provide a copy of any brokerage listing agreement. Your lender will need to approve all broker commissions because they are deducted from the sale proceeds.
- Provide a copy of the purchase and sale agreement for your home showing you have a qualified buyer to purchase your home. Work with a cash buyer. Lenders like cash buyers because they can close quickly.
Using an Attorney
It is recommended that you use a foreclosure defense attorney to help you negotiate a short sale. Short sales can be complicated, and the attorney is an expert at getting short sales approved.
