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What is a hardship letter: A hardship letter for a short sale is a written request to your bank or lender, in letter form, requesting the financial institution to consider a short sale to stop the foreclosure of your property.
The hardship letter can make or break a short sale. Your short sale package will be reviewed by a loss mitiigator. A sincere story of hardship can influence the mitigator’s decision to allow a short sale to move forward.
Points to cover in a hardship letter: It is extremely important to put an effort into your hardship letter. Your lender must be convinced that a loss on the property is inevitable. At this time your lender will be weighing the cost/benefit of a short sale rather than a foreclosure.
- Address the special circumstances that have caused you to fall behind on your mortgage.
- Give an explanation regarding your current situation. State what steps you are taking to get back on your feet.
- Do not complain in your letter – that would be a negative in the lenders decision for approving a short sale.
- Be honest and state the facts in a clear manner.
To qualify for a short sale you must show evidence that you cannot continue to pay the mortgage on your house, and your property cannot be sold for what is owed. Short sale applications are reviewed on a case-by-case basis, but are easier to obtain from your lender under the following conditions:
- The market value of your property has decreased.
- You have demonstrated that you have experienced financial hardship
- Your mortgage may or may not be in default.
We at The Smith Team will address on a case by case basis.
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