The Hardship Letter

The Hardship Letter: Telling your Story

As part of every short sale offer, your lender will require a hardship letter or statement. Below are the hardship letter directives from three different major mortgage servicers: 

• “Explaining why the homeowner is unable to pay the mortgage; signed and dated within the last 60 days.”
• “You'll need to tell us in detail about the financial hardship you're currently facing.”
• “The first step is for you to provide us with detailed information about your situation, so we can see if you qualify and what kind of support you need. Your hardship letter helps us evaluate your situation and find the appropriate solution based on your income, loan and circumstances.”

These all sound simple enough, but they can also leave you with a lot of questions. There is more to drafting an effective hardship letter than you may think, so read the tips below and always consult an experienced professional before drafting your short sale hardship letter.

• Know the programs. The loss mitigation programs for which you may qualify will depend on your loan servicer, the investor, and a few other factors. This is important because you must know the recognized hardships under these specific programs.
• Identify your hardship. Once you know the hardships recognized under the relevant programs, identify your hardship specifically before going into details. Make sure all the details of your hardship are factual and relevant. Avoid “venting” and long, rambling explanations. These can cause the individual reviewing your hardship to miss the key points of your actual hardship.
• Stay organized. If possible, tell your story chronologically so that the reader can follow. Begin your story with the start of your hardship and end at present day.
• Make your request. Always clearly and unequivocally state that you want to be approved for a short sale. Although you may have a listing agreement or even an offer on your house, remember that some requests for help with a mortgage are for loan modifications, forbearances, or other programs that will have the borrower staying in the home. If you are looking to do a short sale, make sure your letter clearly states that intent.
• Sign and date. Every hardship letter (and just about everything that is submitted to the servicer in a short sale) must be signed and dated. Also, note that many servicers require it to be dated within the last 60 days.
• Include contact information. Make sure the servicer knows how to reach you and your attorney if you are represented. A phone number, e-mail address, mailing address and fax number should be provided if possible.
• Handwrite (maybe). If you write legibly and have the time, you may want to consider handwriting your letter. Although this is not as essential as the tips above, handwritten letters add a personal touch to short sale request.