Why You Need a Short Sale Hardship Letter
A “Financial Hardship Letter” is required by most lenders and is the one opportunity you get to explain your situation in personal terms. While they’re not looking for your life history, banks want to know they’re not getting ripped off and that you have a legitimate reason for requesting help. Use our Sample Short Sale Cover Letter and attach a Short Sale Financial Hardship Letter similar to the Sample provided below.
The Financial Hardship Letter can be used with Short Sales, Loan Modifications and Deed in Lieu of Foreclosure and generally covers the reason for your economic hardship. Most financial problems fall into one of two categories-medical problems or job loss. Although many face foreclosure issues because adjustable rate or balloon mortgages have matured resulting in unaffordable payments, most of these situations are accompanied by unemployment/underemployment or medical issues.
Remember, banks are not your buddies and don’t want to help you unless it helps them as well. So while its important to honestly explain your financial condition, let them know how your foreclosure alternative will help them. The biggest benefit to the bank is usually avoiding the time and expense of foreclosure lawsuits, but its also important to remind them that if you can’t sell your property they’ll end up with more real estate they don’t want to add to an already bloated inventory with ongoing insurance and tax obligations.
Because there are so many personal factors involved with each borrower, the Sample “Short Sale Hardship” Letter below should only be used as a guide for what type of information to include in your letter. Personalize your situation by letting the bank know there’s a reason for your problems and that you’re strong and intelligent enough to protect your foreclosure rights and not just roll over and give up.
Remember that with any of the Foreclosure Options we cover, although you can do it all yourself the chances of success greatly improve when you hire qualified and experienced professionals to help you. If you’re looking for a loan modification, hire someone who can help you get the job done but make sure you don’t pay up front fees and be sure to work with them using the information provided on our website.
If you decide on a short sale, hire a realtor who has experience handling short sales and is someone you can trust. With a Deed in Lieu of Foreclosure, a brief meeting with an attorney to discuss your legal rights and obligations can only help you avoid problems and maximize your benefits. Avoiding Deficiency Judgments
Sample Short Sale Hardship Letter
FINANCIAL HARDSHIP LETTER FOR LOAN NUMBER_____
This Financial Hardship Letter will summarize our current financial situation, explain how we got here and support the request for a “short sale” of our home to avoid a foreclosure lawsuit with nothing to gain for either side.
Our present difficulties arise from a combination of two factors – recent job loss [or medical problems] and the deterioration of the housing market and our resulting underwater mortgage.
Because of my recent unemployment [or medical problems], our household income has been significantly reduced. In fact, our income has been reduced from $____/month in 2010 to $_____/month currently. Although I hope to return to work as soon as possible, there’s nothing imminent and I have no real idea how long it will take. Until that time, we have little or no income and simply can’t continue to make loan payments.
Further complicating matters, because we have an underwater mortgage typical relief avenues like opening a home equity line or getting a second mortgage are simply unavailable when there’s no equity in the home.
As a result of our reduced income and uncertainty as to when it will improve as well as the unavailability of equity based credit, we have no option but to work with you to sell the property for as close to the mortgage as possible. By agreeing to waive any resulting deficiency balance, which is not collectable anyway, you’ll make the transaction feasible for us and fair overall.
The alternative in light of our dire financial condition is a long and expensive foreclosure lawsuit for the bank with the same inability to collect any deficiency balance. Further, rather than disposing of excess inventory through a sale of our home, you’ll just end up with another property to maintain and eventually dispose of at a greater loss.
Please let us know if you need any additional financial information.