A Hardship Letter is one of the required documents which must be offered to a lender to qualify for a real estate short sale.
The basics of this letter is to inform a bank or lender the reason(s) which you are now unable to fulfill your financial obligations. Often times a hardship letter is the document which truly determines the result of you selling your home as a short sale. Lending institutions heavily focus on the hardship letter to determine how dire your personal and financial situation is, as well as which option, foreclosure, short sale or bankruptcy, is more beneficial to all parties.
Knowing how important a Hardship letter is to the short sale process 1st Choice Title offers some tips and an example to aid you in your real estate endeavor.
When writing a hardship letter one of the first things you'll want to do is sit and think about all the various reason why you may have incurred your current financial difficulties. Be sure to write down all the reasons which come to mind, check out our Do you qualify for a short sale article and look at the examples of acceptable and non acceptable hardships .
Once you have a good selection of possible reasons choose the reasons which have had the largest impact on your personal finances and current situation. Think about these reasons through the eyes of your lender, bank or financial institution. After narrowing the reasons to 3-4 hardships think about how each of your financial hardships has effected you, as an example " Having been laid off on March 18th, my income has decreased by $2,500 per month".
For your connivence we have a Hardship letter example lower on this page, follow the basic lay out replacing some of the marked areas with your information. Remember to write clearly or type, pleas from a hardship letter will fall on deaf ears if it can not be understood.
Current Date
Name of bank or lender
Address of bank or lender
Hardship Letter - Short Sale for your address
To whom it may concern:
I originally purchased my home at your street address in city, state while being gainfully employed by Name of business or employer.
Business was very good and with the prospect of a promotion and a raise in salary I was guaranteed to easily manage my financial obligations. Unfortunately this prosperity was not meant to last.
Since month I began experiencing financial difficulties due to the following situations.
Here is where you would list the reasons and their effects on your finances which you should have brainstormed about earlier-
EXAMPLE:
In February I was diagnosed with leukemia, the medical bills and treatments cost around $2,000 per month, a large cut into our household income.
Having been laid off on March 18th, my income has decreased by $2,500 per month.
In April My wife decided it would be in her best interest to file for divorce, this has been a costly process and with out her additional income our monthly household income has been reduced by another $2,500.
After having my current financial situation carefully analyzed, I have come to the conclusion that it is no longer possible to comply with the original terms of our agreement.
I am left with no choice but ask you for your help on avoiding the foreclosure of my family’s home.
Due to the dropping of home prices that have affected the entire country, I currently owe more on my mortgage than my home is actually worth.
Please consider allowing me into your Short Sale Program so that we can lower the price and sell the house quickly before it goes into foreclosure.
This will allow me to settle my financial obligation to you and have a chance to repair my financial situation, without having to file for bankruptcy.
Please understand that financial hardships can occur and rarely is it a choice.
I would truly appreciate your help with this. If you have any questions, or need anything further from me, you can contact me at your complete phone number .
I am enclosing my bank statements, late notices on other debts, last year's tax returns, last 6 months of Profit and Loss statement (if self employed), last 2 pay stubs for all working borrowers (including L&I and unemployment benefit.) Authorization to disclose personal information and anything else that will prove your current financial hardship
I, your name, state that the information provided above is true and correct to the best of my knowledge.
Thank you for your time,
Home Owner Name
your signature
Address
Account number
THE ABOVE LETTER WAS FOR EXAMPLE ONLY
every situation is different and this hardship letter example may not suite your situation
