Hardship Letter Tips

The first step is to organize your thoughts about your hardship. Jot down all the reasons about why you can no longer afford to make your mortgage payments, why you are having financial problems. Next, pick out the top reasons that have the most impact on your financial situation and are the most critical.

Once you have identified the top reasons you have a financial hardship, write down exactly what happened and why this is affecting your ability to make your mortgage payment. For example, “On May 1, 2009, I was laid off from my job and my monthly income subsequently decreased by $3000.” Or, “On July 1, 2009, my husband and I divorced. As a result, my monthly income has been reduced by $3000 and is limited now to just my current monthly salary of $2200.”

Begin writing your hardship letter by following this format. Line 1: type the date. Line 2: type the name of your lender at the top of the page. Line 3: type the address of your lender and skip a line. Line 4: type “RE: your loan # and property address – Request for Short Sale. Skip a line. Line 5: type, “To whom it may concern:”

First and or 2^nd paragraphs: Begin this paragraph with a statement that indicates that there have been changes in your financial situation since you purchased the home. For example, “There have been serious changes in my financial situation since I purchased the above referenced home in May, 2007.” Then, explain what your hardship is using the notes you made in step 2. It is best to be as specific as you can be giving details, dates and numbers. You must clearly explain the major reasons for how and why you got into this financial bind. Your statement must clearly paint the picture of the steps or chain of events that led to your financial bind.

Third paragraph: Explain why your financial situation is irreversible – why you have no way to bring your mortgage current in the foreseeable future. Explain that you have no cash, savings, vacation homes, or other assets that you can use to catch up or reduce your debt. Explain attempts you have made to avoid the loss of your home, e.g., borrowed money from relatives, exhausted savings, used cash advances from credit cards, obtained a second job, rented out a room in the house, inquired about refinancing and partial payments, etc.

Final paragraph: State that you want to sell your home through a short sale process and avoid foreclosure. State also that you want any purchase offers that the lender may accept to be considered as payment in full against your loan. Thank them for their understanding and assistance.

Sign your letter. Provide your contact information as well as your realtor’s contact information.

Remember, your letter must be factual and descriptive. You will be required to provide back-up documentation. Be polite, courteous and sincere. Do not blame the lender for your circumstances.