Listing Your Home for Short Sale, Part 4: The Hardship Letter

Listing your home for short sale is not as complicated as you think.  This is Part 4 in a series.  If you've missed the prior installments, you can link to them here: 

Listing Your Home for Short Sale, Part 1:  Do You Qualify?

Listing Your Home for Sale Sale, Part 2:  Choosing Your Listing Agent

Listing Your Home for Short Sale, Part 3:  Collecting Your Financial Information

In a hardship letter, the home owner must tell the mortgage holder (s) what circumstances have changed that have made it increasingly difficult, or impossible, to pay the mortgage.  Maybe your interest rate adjusted, and you have had a decrease in pay.  Perhaps you've lost a job, or been through a divorce.  Maybe you are being relocated with the military or with your company.  Communicating what has changed that makes you a short sale candidate is what you are looking to achieve. 

The hardship letter doesn't need to be a novel.  Two or three paragraphs usually suffice.  If you are drawing a blank, think for a minute about what you would tell your best friend about your situation, polish it up and put it on paper. 

What absolutely MUST be a part of your hardship letter is your name (and the names of any co-borrowers), the property address that is securing the mortgage, and the loan number of your mortgage.  Date the letter and date your signature.  The hardship letter will generally be sent with your financial information package, that we discussed in Part 3 of the Listing Your Home for Short Sale Series. 

Short and sweet does the trick.  Here's an example:

August 21, 2009

Wells Fargo

Re:  Loan 123456789

To whom it may concern:

I am writing this letter to express my inability to continue making payments on the mortgage secured by my home at 123 Main Street, Hometown, VA, 12345. 

As the economy has declined, my business income has dramatically decreased.  I sell new cars and demand has fallen to a point that I am not sure that I will continue to be employed with my dealership.  My average monthly income has been more than cut in half.

I am including my monthly budget which include utilities, insurance, groceries and a car payment, and the average monthly income I am bringing home.

Rather than lose my home to foreclosure, I would like to pursue a short sale and market the home for sale with a local Realtor.   I know that I will be unable to stay in my home, but would like to take a more agreeable route to minimize the impact to my credit, and minimize your company's total loss.

Sicnerely,

Homeowner Signature    Date

Homeonwer Preprinted Name

In the next installment of Listing Your Home for Short Sale, we will cover one more letter you will need to write, the authorization letter.  That will be in Listing Your Home for Short Sale, Part 5:  The Authorization Letter