Home : Blogs : Rosemary Brooks-The Mother & Daughter Realty Team : Mother & Daughter Blog

Short Sale - Sample hardship letter

THIS IS A SAMPLE HARDSHIP LETTER:

More information on Short Sale: Sample hardship letter (of course, each situation if different) your seller should be able to tell you why they are in a critical condition and why they need to short sell their home.

Lender Name Lender Address Lender's fax number

Today's Date

RE: Hardship Letter - Short Sale for _____________________ address

To whom it may concern:

I purchased my home at _____________ in ___________. At that time I was employed by _______and business was very good. My salary and the possibility of a promotion and raise made me sure that I could easily support my mortgage. Unfortunately, a downturn in the market caused my company to reduce its workforce and I was laid off.

After searching for a comparable job, I finally got a temporary position as an office assistant as I continuing seeking other work. I struggled for several months to make my mortgage payment, and was also hit with some medical payments that I did not expect (the COBRA payment was more than twice what I was paying when employed). I knew I would have to sell my home to protect my credit rating and possibly have enough cash left over for moving expenses and some savings. I put my home up for sale by owner in _________, but there were several problems that I did not have enough money to fix, such as the broken fence in the back yard and some pretty severe leaks in the roof which indicated a new one was needed. Over the next three months I lowered the price three times but still had no takers. I am now working with a real estate agent and I believe she will be able to help me sell quickly.

I really love my house, but I know that I cannot afford it. I am a single parent, working as a temporary employee with few benefits and no savings. My financial situation cannot sustain a home mortgage of nearly $2200 per month. I want to sell the home, avoid foreclosure and salvage my credit. I know that a foreclosure on my record will affect me for years to come. I would ask that you please assist me in avoiding this.

Please accept this offer as payment in full. My attorney has advised me to file bankruptcy, but I prefer to avoid further destruction of my credit. I just want to move on and start over.

I deeply appreciate your help and understanding in this matter. If you have any questions, or need anything further from me, please contact my agent or me personally.

Sincerely, Home Owner Name Address and Contact Information

Our Website: www.shortsale-HAFA.co

*************************************************************************

The Mother and Daughter Realty Team

Rosemary Brooks (DRE # 01336351) Realtist, CDPE, HRC, CDSP, REO & HUD Certified

D'Adrea Davie (DRE# 01510971) Realtist, CDPE, HRC, CDSP, REO & HUD Certified

EMBARCADERO INVESTMENTS - the Real Estate Company

Ofc: 866-543-0461 Msg: 209-910-3706 Fax: 209-762-6971

EMAIL: motheranddaughterrealtyteam@gmail.com /

REO Website: www.centralvalleyreos.com

WEBSITE: www.motheranddaughterrealtyteam.net

Short Sale Website: www.shortsales-HAFA.co

Do you need a Central Valley Short Sale Specialist? If you have any questions or would like to discuss any real estate related issue please contact the Mother and Daughter Realty Team at (209) 910-3706 or complete our Contact Form.

Rosemary Brooks & daughter, D'Adrea Davie - The Mother and Daughter Realty Team specializes San Joaquin Central Valley, Stockton real estate, Homes for Sale, Housing: Stockton short sales, Lathrop short sales, Tracy short sales, Manteca short sales, Lodi short sales, Mountain House short sales, Salida short sales, Ripon short sales and Modesto short sales.

ATTENTION CENTRAL VALLEY HOMEOWNERS:

We can help you with a Short Sale if you are in a situation of

*Pre-Foreclosure *Hardship *Job Lost *Reduced Income *Divorce *Upside down on Equity *Can't afford Mortgage *Unexpected Medical Expenses * Can't Refinance * Failed/Denied HAMP Loan Modification * Other

Some of the BENEFITS OF A SHORT SALE

*Avoid Foreclosure *Reduced damage to your credit *Free of financial burdens * Relief of the stress * Possible incentive from HAFA (Home Affordable Foreclosure Alternative)

ASK me about - WACHOVIA FASTTRACK SHORT SALES

It is an EASY, NO Stress & FAST way to get an APPROVED - Short Sale

WE SELL REOs & HUD HOMES

Serving the Central Valley, Stanislaus & Bay Area

WHAT IS A REALTIST?

A REALTIST believes in "Democracy in Housing" - the principle that all citizens have the right to equal housing opportunities, regardless of race, creed, or color.
A REALTIST believes in preserving the rights of all Americans to homeownership and is dedicated to serve the unserved and underserved by developing creative and effective methods of doing so.

Central Valley Realtist Association(CVRA) / NAREB / CAREB

www.centralvalleyrealtist.com / www.nareb.com / www.CAREB.org

Posted by Rosemary Brooks-The Mother & Daughter Realty Team on 06/15/2007 02:21 PM

Comments (127)

Short Sale - Hardship Letter (Sample) in the ActiveRain Channel

short sale, hardship, bank owned, reo, foreclosure, default, rosemary brooks, motheranddaughterrealtyteamcom

Originally posted at: Mother & Daughter Blog: Short Sale - Sample hardship letter

Generate short URL

This post has been included in California Real Estate News San Joaquin County, CA Real Estate News
Post is included in group: Short Sales and Forclosures ONLY
Post is included in group: Short Sale and Loan Modification Nightmares
Post is included in group: Posts to Localism
Post is included in group: Foreclosure Alternatives Program

127 Comments on Short Sale - Sample hardship letter

JUN

2007

This is a good sample letter. It gives sellers an idea of how to go about writing one that can, hopefully, make a difference in their situation. Thanks for sharing it!

Leanne - you're welcome. Yes it is a sample and all situations are different but to put it into words and let the lender get a visual of what is going on will help them understand the situation better.

JUN

2007

Outstanding.. Thanks for the info..

BOOKMARKED

Eric - you're welcome and thank you.

JUN

2007

My agent who has had no experience in short sale is putting it on the market first before approaching the lender for a short sale. Another agent said that my agent is doing it in reverse. What is your recommendation? SOS.

JUL

2007

great post ,loved the letter

T Stinnett - That is how I do it. I list the house at the fair market price or for what the house is worth and I put it under short sale. However, the important thing is to note that it is Short Sale with lender approval. Sale/Commission is upon lender approval and commission will be split 50/50. This is a good disclosure to other agents that the sale and commission is all dependent on the lender. You must disclose.

Then at the listing I also get a letter of authorization signed by the seller and I get the form Authorization to Receive and Convey Information also. I also get all the mortgage information such as loan # and other important information including the seller(s) social security number. Why the social security #? Because you will need it when you call into the lender - some ask for the whole number and some ask for the last 4 digits. I get the fax# and any other information on the mortgage. Get these signed by the seller.

Then I fax these two forms to the lender alone with a letter requesting information on the mortgage such as payoff information and short sale procedures (which means what do you need to request a short sale approval.

All the lenders that I have contacted will not discuss if short sale is possible until after you fax in a Purchase Agreement. So what you're asking for just the procedure.

Hope this helps. I have several posts on short sale and the procedures. I learned them hard knocks by going into it and asking questions along the way. Then I documented what I had to do.

Rosemary Brooks - Mother and Daughter Realty Team of Evolve Realty Group

JUL

2007

Thank you for the information. I am going to save this letter . I did not know that we can advertise it as a short sale. I would list it at a value equal to what is owed plus commission and then when a low offer comes in tell them I have to get approval as they owe more. Thank you.

In California we have to disclose that it is a short sale and put in the disclaimers so that we don't get caught cutting ourselves on the commission. Not sure how it works in other states.

I always put in the comments: Sale/Commission is depended on lender approval & Commission will be split 50/50.

This is very important, because suppose you listed at 3% or 4% broker split. Lenders usually will only agree up to 5%. Now you will end up with less than the buyer's agent -- if you do not disclose that the commission is depended upon lender approval! That's how it works here.

This is a good sample letter. This will give me a good idea about how to go about writing a short sale letter. However,I have no knowledge what so ever on this particular topic.

go to mother and daughter blog, there are several short sale posts and full of information, Also do a search on short sale and you will find a great many.

Thank you very much. I really appreciate that.

JUL

2007

Lanre - you so welcome! Have a great day! or should I say have a short sale!!!

JUL

2007

I also listed the home before preapproval of the short sale. We received 3 purchase contracts in less than a week...incredibly, all 3 contracts came in at the same purchase price! Our stratagy was that hopefully we could have offers to submit with the sellers completed "short sale packet" in order to expedite the lenders decision process. Within a week of the lender receiving contracts/packet..the bank appraiser was sent out and now we will have a decision in about 3 days. That would put the time at about 2 weeks (including weekends!)!!

AUG

2007

That is great news. Please let me know the decision. lol

AUG

2007

Rosemary--I understand why the borrower must submit a hardship letter in order to persuade the lender to agree to a short sale--to prove that a solvent borrower is not trying to eliminate part of a loan that he could pay over time. But why does the borrower need to prove that his hardship is temporary in nature? I understand that the borrower needs to do that to convince the lender to give the borrower a workout plan, or to temporarily hold off on foreclosure. But if the house is likely to sell for less than the mortgage debt and the borrower has no income or assets or prospects for a job, isn't that a good reason for the lender to agree to a short sale, even if the borrower's hardship isn't temporary? And don't lenders benefit from having a borrower in the house and helping to market it, even if the borrower can't pay the mortgage while it's for sale?

Garland - there is no rule that the seller has to have a temporary hardship. A hardship is a hardship. What the lender should be looking at is:

Legit hardship (please check out my blog on: Hardship or not? that is the question....) This hardship has to be a valid and truthful account of what actually happened to caused the mortgage problem in the first place. Some of my sellers lost their job, got behind and now has found another job. But the reason for the default was due to no to low income and catching up is not something they can do. Or the loan adjusted and they cannot afford it (rather they lost their job or not). Check out that list of valid hardships.

An unquestionable hardship is certain the seller that lost their job,has no income or assets or prosect for a job. I certainly agree with that.

The sample letter is just that a sample. You would write the incidents that cause your seller into hardship, just be certain to document a clear story of what actually happened. Show that your seller cannot afford the house and that it would make more sense to sell it short than to go into foreclosure - both for the seller and the lender.

Now if you want a workout plan and you don't have a job. Hopeless.

SEP

2007

If the lender approves 5%, 50/50 commision, and there is only one agent, does the agent get 5% or 2.5%.

Carol - if the lender approves 5% you get the whole commission if you are the only agent. lender is only looking at the listing agreement where the commission agreed upon by the seller is located. Remember to ask for more than 5% and let the lender counter it down. Good luck.

Excellent! In Michigan, it's important to know what this letter should read. Good to include facts, numbers, monthly bills, and a few reasons why - because whoever reading this is a person too.

Thanks!

Dana - so true. Also, if your seller has tried to get financing and been turned down (especially with the new "plan" just announced) --- make sure you put that in the letter. BTW: the new plan is probably not going to hit many of people that already feel they will need to do a short sale. Hopefully, there will be more plans that will help more people in this situation.

SEP

2007

In the past I have represented both the buyer and seller in a short sale trasaction and they only wanted to pay me a total of 3% - it was a fight to get more - so now if I have the listing and also find the buyer I will refer the buyer to an agent in my office. I still make more then if I only had one side and it helps out another agent.

Donna got idea. My daughter and I work together so we can do the same. She do the buying and I do the listing. I haven't had any problems so far with that, but I would not put it pass the lender to look at cutting here and there and commission is first.

SEP

2007

Rosemary, It is most unfortunate but I know that the need for this type of letter does exist.

In my area we are not experiencing as tough a market as some portions of the country. Hopefully, there will not be the need for Short Sales here. From the appearance of the Maryland economy, unemployment and other factors effecting the market, we shouldn't have this problem.

Phillip that is right on. We here in California are going through it and it doesn't look like it is going to slow up anytime soon. It is unfortunate - for sure.

OCT

2007

I live in Florida, and is the process of writing my hardship letter to my lender. My house value decreased 40K and with an adjustable rate, my mortgage is increasing 600 per month. Would this qualify me for a short sale approval..I need some answers

NOV

2007

Rosemary, great post and awesome sample letter. Keep doing what you do and best of luck.

Lyn, I think it is a start, remember only the lender can truly approve if your problems are hardship. Sounds like this is something that is causing you problems with your mortgage. But it really depends on the lender. Good luck!

NOV

2007

Rosemary

This is a hardship letter alright and sadly too many people in this country have the same story. Pity many people opt to try to sell the home themselves thinking they will save money as in this letter the person had things wrong with their house during a home sale. A experienced agent would have know how to work the repairs into the contract thus saving the owner thousands of dollars.

Instead of saving money now they are stuck in a contract with an inexperienced agent who doesn't know how to handle a short sale much less work on repair issues, the money thought to have been saved is now lost in continued payments and the value has more than likely gone down on the home.

People who are going into this situation should start on the right foot and hire the Pro's to begin with.

NOV

2007

Nice Letter! I have about 50 others if anyone is interested, just ask:)

Anthony Fico

NOV

2007

This is good information. Yes, I have a short sale currently, and we did this as well. The hard part is that we have to wait for the bank to make a decision, which takes about 60 days

NOV

2007

Donald, this is true the lender/bank do take their time about rendering a decision. Did you ask them to delay the sales date or is it close enough to have to worry about it?

NOV

2007

RoseMary:

Thanks for sharing this information with others. I have only been in the business for a little more than a year now and working on my third short sale. The first one went into foreclosure because no one was willing to share any information and I was only 3 months out of school with no idea where to start. the next one went into foreclosure because the seller contacted me after the bank gave her an approval to do a short sale and only 2 months to get it completed. It was 3 weeks into the 2 months before she contacted me to help her sale it. The bank turned down the original offer she received. Now I'm working on my 3rd short sale, but I am initiating this one. The lender requested an hardship letter and your letter gave me direction on where to began and how to formatt the data. My seller has not been deliquient on her payments yet, but is moving out of the home as of 12/01 because she can no longer afford to pay for her home and eat at the same time. Her house note has not changes, but she has been placed on disability and has utilized all of her savings trying to keep the home. The note, utilities and upkeep of the home is just too much for her to handle on her disability income. I've received an offer for the home less than 5K from the payoff amount. I will read your blogg for any other information you've included in hopes to help me make this a successful sale. I will appreciate any thing else you can share to make this a smoothe transaction also.

Grateful,

Zelda

NOV

2007

Thanks for sharing this, i am currently working with a seller and this was a huge help as we had no clue what to put in the letter.

NOV

2007

Zelda - some good news and some not so good, but that is how short sales seem to go. With this one you're working on now -- good luck and it sounds like a good deal if it is only $5k away from payoff. Just collect all the paperwork they require for a short sale, follow up with the lender after allowing them the 48 hours to process and see if there is anything else they need and then you pray more. I say pray more because I am assuming you were praying in the beginning!

God bless and success with your short sale. If you need additional information, check out my blog and others on AR.

DEC

2007

Hi Rosemary! I am one of those homeowners who are opting for a short sale due to financial hardship. Thanks a lot for this hardship letter sample. This really helps. Also, I have questions : if the property is already on the market for short sale, do I still have to pay for the monthly payments? What if there is no activity or offer on the sale like more than 2-3 months in the market? Will Deed In lieu of foreclosure works? What if there is a second mortgage on it? What happens?

Thanks in advance for taking time to answer my questions.

This one's getting a lot of views. That's awesome Rosemary! Congrats on over 14,000 views of this post! That is absolutely incredible! Great job! :-)

Rosie, I will attempt to answer your questions to the best of my ability. But I strongly suggest you either have an agent to do this for you or you call your lender yourself and get these a clearly understanding of where you are in the process and what if anything they can do for you.

1. If the property is already on the market for short sale, do I still have to pay for the monthly payments? If you can pay the monthly payments you should do so. Because you are telling the lender you cannot afford to pay, but if you are asking this question it sounds like you have the money but are just not sure if you should pay. I cannot advise you to not pay. If the payment is not behind -- it would be wise for you to contact your lender and try to work something out with them. Call your lender.

2. What if there is no activity or offer on the sale like more than 2-3 months in the market? No offer more than 2-3 months. I'll answer this a question with a question: Are you in default or just trying to sell now to avoid default. If you are in default the foreclosure timeline will dicate what will happen after 3 months of recordation of Notice of Default. Once the default is recorded (called Notice of Default) in California you will have 90 days then a Notice of Trustee Sale Date will be recorded (allowing another 21 days) and then there will be a Trustee Sale if no offer or short sale approval is approved by lender. This is why you should stay in contact with your lender.

3. Will Deed in lieu of foreclosure work? It might not be an option. It too is lender approval. So please don't assume it is something you just chose and it happens. Lender are hesitant to offer in lieu of and there are many factors that only the lender know that will be the deciding point of yes they will approve or nope they won't. Call your lender.

4. What if there is a second mortgage on it? What happens? If there is a second, you will need both lenders to approve the short sale. If you do a workout with the lender in default and the other loan is caught up there should be no problems. If both loans are with the same company, you have more going for you. Call your lender.

I hope this helps and I appreciate your stopping by and commenting. Happy and safe holidays to you and your family.

Brad, thanks for letting me know that! 14,000 how does that work and I only have 38 comments? Somebodies don't like to write!!! smile

....but they're reading.....smile!! :-)

Brad so true and that I appreciate and I hope that they are finding it useful. With the market as it is now and the situation with people being forced to request short sales this should help. I have heard so many say it is hard writing that hardship letter for a few reasons 1 being it is heart breaking to talk or write about it. And some people are just not good at putting facts into a make sense order. And you want that lender to understand your situation. So I truly hope it is useful to all 14,000 in some way. Thank you for pointing that out to me, sometimes we get caught up with the comments as a measure of how many you have touched.

Craig I am glad this was helpful in getting your client started on writing their hardship letter. It is important for them to know that the lender will want the truth and will want to have it in some order to show what started the hardship and how it escalated to the point of a hole they could not see themselves out of in order to catch up on the mortgage. It is also ok to let them know that you are OK now but you had the hardship and got so far behind you could not catch up. Be truthful and give them facts they can verify.

John Occhi wrote a really good article on how he handles getting all the necessary information from a seller of a short sale right from the gate. Check it out for the next short sale.

Happy and safe holiday for you and your family and thank you so much for stopping by.

Hi Rosemary, thanks a lot. I really appreciate taking time to answer my queries. It's really informative and great help. Have a wonderful holidays too! God bless

DEC

2007

No problem, I'm always happy to encourage and help any way I can. You are just around the corner from us, that makes you my neighbor! You know what they say about your neighbors! Love thy neighbor! :-)

Rosie - you are welcome and it makes my day if I am able to help in some small way. The short sale process is not an easy one to do, get an approval and all that. Even doing all that is advised is no guarantee that you will get the approval, because it is up to the lender. I keep reminding everyone to please contact the lender --- since they say they are trying to help - give them the chance! As it stands right now most will probably not be able to get help from the lender but your client just might be that one that slides through. Good luck. God bless.

Brad, I love you, my neighbor.

Happy Day!

DEC

2007

awhhh shucks... - (brad blushes) Thanks Rosemary, that was beautiful!! :-)

I would love to see that -- (brad blushes)! smile. glad you liked it, its real. Happy early morning!

DEC

2007

This is a great letter...thank you very much!

JAN

2008

Great Information, especially since most people are not to familiar with the short sale process.

Have a great New Year,

Philip Maltaghati

NYS Certified Residential Appraiser

Rosemary,

Many homeowners believe that a short sale is pretty simple and quick and it really isn't. The hardship letter is a key document in the process and if the hardship isn't plausible, the process stops. Your letter is a great guide.

Esko - so true. If there is no hardship, there is no reason to approve a short sale.

Philip ~ my goal is to inform people of the process. It took me a long time to figure it out but sharing the information and hopefull is a big help to others that find themselves representing a seller that has to request a short sale. Since there is no standard format for short sale, any information put out to the public should be helpful.

JAN

2008

As Esko said, short sales can be a very long process. Sometimes it takes up to 6 months just to find out the deal wasn't approved. A few deals I was involved with where the BPO was so high that the realtor selling the home couldn't even get buyers for the approved short sale. The sales used in the BPO were not even comparable. It's a shame that real estate agents/brokers with no BPO experience would take on BPO work from banks. In this case, the realtor could not get a lower approved short sale from the bank and the homeowner went into foreclosure. There are a lot of factors that can make or break a short sale. GOOD LUCK!

Happy New Year,

Philip Maltaghati

NYS Certified Residential Appraiser

Philip ~ so true, so many things. I have ran into several that just didn't have a chance due to bad BPO information submitted or some other small factor. Lenders just don't seem to care that much to help.

JAN

2008

Hello,

I bought a second house a year ago, I've been trying to sell it with no luck ever since, currently my house is worth almost half of what it actually cost me and my mortage went up this year from $1700 to $2500 a month due to taxes and insurance. My initial plan was not to keep this house, but to sell it for a small profit, so I choose the simplest type of loan (interest only for the first 5 years); this being said I do not think my lender could help me any further. I'm behind 3 months on my mortgage. I do not want to keep this house:

If I ask for a short sale, and it's granted, but it doesn't sell ...how long before the houe goes into forclosure? do I have to contiue paying my monthy mortgage until the house is sold, eventhough I already received the Notice of Default and accelaration from the lender?

My other option will be a Deed in Lieu of Foreclosure. Does anyone have sample hardship letters for this?

Thank you for your help

Juan

Juan ~ Let me take the easy part first, where do you live? California foreclosure laws are different so I don't want tell you the wrong thing.

To answer your question from California: Normally, you will not be given short sale approval until you have a formal offer and all the other items your lender require for you to request a short sale. If you get a verbal that its OK to do a short sale, this is true - you have the option to list and offer your home as a short sale, but until you get that lender to approval your short sale request - you have no sale. And you would need to be sure your contract with the buyer states that your sale is upon lender's approval.

Deed in lieu of foreclosure: From what I know about DIL they don't come easy. Usually if you ask the lender for this option... you won't get it. But that is not the rule its just how lender have been responding to that request. I would think the same hardship letter and financial information would be required but I would stress that you ask the lender for the requirement and procedures for a DIL (deed in lieu of foreclosure).

Timeline: Here again, In California: you have 90 + 21 days after the Notice of Default is recorded. Unless some delays come your way.

I hope that this helps. If not and you are not in California, let me know. I do my best to guide you to someone in your area that can provide you the information for your state.

I wish you the best of luck with your situation. I know that it is not a good time and situation.

JAN

2008

Rosemary, Thank you so much for your reply...is the first time someone gives me a straight answer, and believe me I have knocked on many doors.

Actually, I live in Miami-Florida, The house I bough is in Cape Coral - Florida; I do not know if there are any changes on your suggestionm because of this.

I'm trying to sale the house below cost right now, but at my loss. I didn't want to be driven by this situatioin to the possition that I'm now, I was willing to loose money on this deal, but wanted it to be done and move on, but as I mentioned before no offers have come through. That's why now I'm concidering either a short sale or a DIL.

Rosemary, if I get the aproval for a short sale by the lender, do I have to contiue paying my monthly mortgagepayments until the house is sold? eventhough I already received the Notice of Default and accelaration from the lender?

Again thank you for your help and if you know of any one that can help me in my area I'll really appreciate it.

JAN

2008

Great topic and dicussion! I am meeting with a Realtor tomorrow who does alt of short sales business. This will help me talk the lingo.

-Sean

Juan, I will email you on this. But I also suggest you check with a professional on the drawbacks of foreclosure and DIL in your state. California as are many other states ran a little differently than Florida.

I wish you much success for this situation. These lenders are not bending much and as always be careful of virbal agreements, they don't mean much at the end of the day. And watch your buyer too, they will change their mind at the end of the day -- before the close. Its so many homes in inventory they feel they have so much selections so they don't wait around long. lol

Sean, good luck with your meeting. Walk the walk, talk the talk.

JAN

2008

Hi all,

I'm a homeowner trying to sell my home in a short sale, and am now 3 months behind on payments. We had one offer on the home, but it was retracted.

My questions are:

1) We have found another house that we would like to rent. I know that we are living essentially "rent free" right now, but I think our house may have a better chance of selling if it's vacant..should we move?

2) Has anybody attempted a shortsale with SunTrust and were you successful?

Thanks

Jayne

Jayne: Sorry I answered you but the system did not save it I guess.

1. vacant home vs occupied: I could not tell you to move and if the rent is free! Hey I think that answers your question. But seriously there is no guarantees that your home will sell quicker just because it is vacant. That's just my opinion. I know it is easier for the agent probably to have it vacant, but we as agents are working you the seller and whatever works for you and your situation has to work for us. That's how I look at it. Have a home is that neat and presentible is important to the sell but not every household can just move out.

2. Not sure about SunTrust. I do some looking around to see if I can find out anything about them. But I will say in my experience, its no telling.... some deals go smoothly and some have issues not matter who the lender is. It is like they just get up on the wrong side of the bed and tag you're the one they can be mean to and just say no to.

I wish you the best and I am happy for you that you are dealing with your situation in a less stressful way. I am also happy for you that you do have another place to life. God bless you.

JAN

2008

Hello Rosemary, Hi everyone,

I live in CA and my question is, can I request for short sale if my financial hardship is only anticipated or has not happened yet? My loan will reset in a couple of months and my mortgage payment will increase from $3000 a month to about $5000 a month? I have no late payments but I can't afford the new payment even with a part-time job that I have now plus my full time job. Do I have to wait when my mortgage resets and when i'm actually in financial hardship? Thanks for your response!

Jay ~ You can request the short sale information at any time. I would probably first try to see if they will do a loan workout with you on your adjustable. If you are not in default you may qualify for the freeze that the president announced. If they cannot do a workout plan and you cannot afford to pay your mortgage after the adjustment I'd let them know that and see what they suggest. That's the best way to do it. That way you're giving the lender the opportunity to help you out.

If an when you start to get behind.... list your property and get to work on finding an offer that is good enough to submit. OR you could list it now if it is upside down and list it as a short sale. Usually the listed time in California is up to about 3 months before you start to get hits from potential buyers. If you definitely know you cannot afford the house once the payments go up and the lender refuse to either freeze your payments or lower them.... this is what I suggest...

Hope this helps.

JAN

2008

Im very interested in trying to do a short sell on my home in california. for one, its listed as my primary residence so just want to confirm I wont have to pay taxes on the difference bank would forgive. Also, I spoke to loss mitigation rep from my lender and he couldnt send me a short sale packet but told me to send him last 2 bank statements, last 2 paystubs along with hardship letter. I get a bit confused here because he told me I need to be at least 2 months default on my mortgage to even be considered. A realtor told me this doesnt necessarily have to be.

Also would it be better for me to see if i get any offers for a short sale price first then send these offers along with my hardship letter to the lender?

Also one more thing.....my hardship is that I'm getting a divorce and I have 2 kids, so with my upcoming alimony and child support payments that will make it very difficult for me to afford keeping my home.

Thanks in advance,

Gil

Gil: I have a mixed answer for if they will or won't take a short sale if you are not in default. I have a couple people say they were not discouraged by the lender for asking before default. But if that works for your lender -- obviously not. If they told you what they require and one is that you are in default, that's the way they work it. There are no standards, just that particular lender is calling the shots as is with other homeowners.

I'd wait until I had an offer and submit all the information that they require for a short sale approval. Sending it now and then having to send it later is a waste of your time. They will pre-approve a short sale, this I know.

That is a valid hardship according to all I've heard. Just keep up with your records and write out your hardship using dates that can be verified.

Good luck.

JAN

2008

I'm a RE agent in CA and working on my first Short Sale. The First is short and the Second will get 0. Any words of wisdom on how to convince the second to accept the 0 demand??

Thanks

FEB

2008

thanks for the letter pattern, i had no clue what to write. now i can go to bed!

FEB

2008

Having a true hardship, there would be little need to seek "reasons" ~ the hardship would be evident and apparent. I've been asked to write such letters where the hardship is really decreasing property value! Is that truly a hardship...?

Thank You for the format.

DD~ Sorry I missed answering this for you but I hope it worked out for you. The second is a loser either way is what they know.

Janine ~ I so glad it helped you and good luck with your situation. Let us know how it works out for you.

Mott ~ I do not think so. Hardship is just that, something that has happened to make your financial situation change to the point that you cannot afford the property. We are all suffering from the market going downwards

That's a great letter! I may use a variation of it some time.

FEB

2008

ROSEMARY ! You are SO helpful to so many ! That is so kind of you. THANK YOU. Could I possibly ask you a question?

Facts:

Townhouse in CA was primary residence 2003-2006.

In April 2006 I refinanced with an interest only loan. Big mistake!

In July 2006 my family relocated to Colorado and I followed being a single mother with two children and needing their help with the kids, etc. I rented the townhouse out and bought a home Colorado.

The loan is amortorizing, reached 110% of original $320,000 as of June of this year (currently $345,000).

I will not be able to pay the $2500 month payments, plus $290 HOA fees, plus property taxes of $2400 annually (rent obtained monthly is $1575).

When I moved and changed jobs my income DECREASED substantially.

I have contacted GMAC asking them if I can refinance, they said no because they purchased this loan from my original loan company I am "stuck with it." (I am only 2 years into the 3 year pre-pay) I didn't want to short sale nor foreclose.

Do you know anything about GMAC? Do they usually say NO to short sales?

Since moving I got married and am so worried that my husband's credit is going to be messed up with this. I have been told it won't since his name is not on the townhouse paperwork.

My husband also has a house that is up for sale - the market is terrible everywhere. We have three mortages and are sinking fast.

Who do I ask to look over my loan papers and possibly direct me as to short sale or foreclose.

I realize that I will possibly be faced with a Deficiency Judgment and Taxes owed.... I am scared that I am going to lose my house here also.

It is hard to say if a short sale will be approved or denied until you have listed it, provided all the requirements to get an approval and have a decent offer. If you ask ahead of having all the requirements, they will tell you anything.

It is certainly worth a try to see if you can get a short sale but you must follow the process in order to even get them to think about it.

Where is your property located? If you know you can't afford it, a short sale is the best way to go to hopefully savage your credit. If you owe more than its worth, and you want to sell it, it would have to be a short sale unless you have the difference in what you get from the sale and all the closing and paying off the lender.

Hope this helps.

FEB

2008

Thanks for this sample. I can use this in the future. I have bookmarked it for reference.

Tina ~ Great! I hope that it is useful when you need it.

MAR

2008

Thanks for the sample. My husband and I have been debating on what to do. We were unable to pay Dec 07, and Jan 08 mortage payment. We decided not to pay Febuary even tho we could do it we would be right back into the hole for March and not be able to pay March. We contacted a real estate agent recently and inquired about a short sale . We are trying are hardest to salvage our credit to be able to purchase another home in the future. We bought our house Oct 06 for 440,000 in a new track of homes and the are still building but the homes are now 280,000 to 300,000. We feel that we are sinking in this home and want out. I lost my mother to cancer Aug 07 and 2 months later my father fell ill and had to have a few surguries and ended up having a leg amputated and he is now living with us. I am unable to go back to work right now and my husband was an engineer and company was downsizing he was forced to find another job. A decrease in his pay has hurt us we are barely getting by. Im very nervous a nd thought we would never be in this situation but god has other plans for us. We have not recieved a notice of default yet i don't think. Does it come by mail or hand delivered. How long do the mortgage company's give u for a short sale. I know some people who have been living in there house up to 6-9 months without paying. What is the normal procedure for a short sale or foreclosure. How long does a short sale stay on your credit versus a foreclosure. We have a first and a second on the house one with GMAC and one with Auroa Loans.

Thank You for any info you can give me Desiree

Sorry its Desiree again we live in Calif. I know ther is different laws for different states.

MAR

2008

Desiree--If anyone deserves a break, your family certainly does. If you are able to find a buyer for your house, you need to contact the lender and request a "Deed-in-Lieu" of Foreclosure. Here is a sample Deed-in-Lieu Letter. A short sale letter is used in two situations:

You have a buyer for your house, but the offer is less than the amount owed to the lender.
You are able to borrow money from a 3rd party, such as family member, in order to pay off the note. If the amount borrowered is less than the amount owed your present lender, use a short sale letter to ask the lender to accept the amount proffered as payment in full.

In addition to Rosemary's short sale letter, you can find a couple other examples of short sale letters here.

In answer to your other questions, a Notice of Default (NOD) generally arrives 3 months after the first missed payment. This varies depending on the lender. The notice generally will arrive by certified mail to establish proof of delivery (although actual delivery is not necessary, if the Notice of Default is properly recorded and advertised in a newspaper of record. (This is based on California law--I am a California attorney).

The lender, in todays environment will work with you on the short sale if it is realistic to expect that a buyer will come forth with a reasonable offer. The time they allow for the short sale will depend on their assessment of the likelihood of a buyer coming forward.

A ding on your credit from a short sale can stay on your record for up to seven years, but it is supposedly not as bad as an actual foreclosure. I hope this helps. Although I am an attorney, this should not be construed as legal advice. Its general information that you should take with you when you consult with your own attorney regarding your specific situation.

MAR

2008

Thank you Ralph for your explanation.

MAR

2008

RoseMary, it has been a couple weeks since I have had time to drop by to catch up on your post. As usual your post was timely. If the responses are any indication. I am not the only one that feels that way. You take care I will talk to you soon.

MAR

2008

Dionne ~ thank you for stopping by and thank you for your support.

MAR

2008

This is a great letter! My husband and I fell victim to the subprime situation and are now trying a short sell. I have used the above sampe letter, customized it to our situation and have sent it off to our agent.... Thank you very much!

- SP

MAR

2008

Thanks for the sample letter, Rosemary. This is valuable info and I'm glad you are sharing it.

MAR

2008

SP - glad to know this helped. Thanks for letting me know. Good luck.

Lanette - thank you for letting me know this helps. Good luck. Let me know if there is something else I can help you with!

APR

2008

Thank you... this is really informative!

APR

2008

I live in Florida my husband & I have been maintaining his moms property which was taken out in my name she had to leave for cancer treatment it has been a year and we can no longer afford the mortgage. There is a second mtg also we are now 2 mths behind on both we have had it listed now for over a year what is the possibility of a short sale any suggestions?

APR

2008

Grace: If you can't find a buyer, you can approach the bank about a "deed-in-lieu" of foreclosure. A "short sale" is used when you have a potential buyer but the offer is insufficient to pay off outstanding loans. Your situation is complicated by the fact that you have a second. A lender in first position accepting a deed in lieu will have to take the deed and the second mortgage. Call your lender--since you are two months in arrears time is running out. You can find a sample "deed-in-lieu" letter here.

MAY

2008

new

MAY

2008

Good information for the general public and the real estate community.

JUN

2008

Thanks for the sample letter from just one of the many many viewers.

JUN

2008

Mike ~ you are welcome. I hope this sample is helping.

Jonathan: You are welcome, hope it helps.

Thank you! This is a great way to help! So many don't know where to start! You are a blessing!

Great letter - This is so helpful and so are your comments! I am glad you shared with us!! Have a great week.

JUL

2008

Great info, keep up the good work!

JUL

2008

If you are going through foreclosure, should you also file for bankrupcy?

JUL

2008

I googled short sale and came across this blog. Surprisingly, this is my first time reading a blog and blogging. I missed out on a lot of good information. :-)

Quick Story: I currently live in a single family home, but purchased a townhome in 2006 for investment purposes. We are maintaining the mortgage with a renter, but still short $820 a month. Then the market crashed and the Townhomes in that area will not rent for anything close to what I need to maintain the mortgage... (About $1200 a month short). In addition, the value went from $480K to $300K. I am not behind in the rent, but my renter is moving 1 October, so even If I find another renter I'll still be averaging a $1200 loss a month.

Hardship: My wife will be medically discharge from the Military within the next few months and my daughter will begin college in September completely on my dime. Even though we are both employed, not behind in bills, have excellent credit and little credit card debt; I can foresee some hardship over the horizon if I keep this townhome.

I guess I'm wondering if I fall into the category to short sale a rental home and does the hardship story seem to be acceptable? All opinions are welcome.

AUG

2008

I have a question maybe someone can help me with.

First I am new to this board so hello to everyone. Now on to the good stuff . I have my house on the market now on and off for about 4 months with no bites. We just had a baby( 4 months ago) and have twins on the way with all our expenses we can not afford to pay our mortgage payments of $2078 a month. I read some where that having a family is not considered having a hardship now is this still true in today's day and age? We have already refinanced from a adjustable to a fixed and now we find ourselves in the hole because we didn't thing we would have three kids in such a short time in a two bedroom house. With car payment and credit cards and basic nessitity we are barely making it by even thought my husband makes 50K and I make 40K . its still not enough. Does anyone have any advise to share with me. BTW our mortage lener is Country Wide.

nelly

AUG

2008

great information and thanks for the help

AUG

2008

Thanks for this sample letter... it was exactly what I was looking for!

SEP

2008

From an investors' standpoint, the purpose of the hardship letter is to promotesympathetic feelings towards the seller in default, and to make it clear to the bank that the property will likely proceed to foreclosure unless they approve the short sale. Other facts that shoud be included in the hardship letter (to the extent applicable) are medical issues, family issues (i.e. death, illness, divorce, child support, etc.), employment problems, and any other unexpected costs or circumstances which have arisen since the loan was initially made which make it difficult or impossible for the borrower to continue paying. Banks don't want to feel like they are simply getting screwed by someone who no longer wants to pay their debts.

OCT

2008

Hello, everyone... great blog! Since short sales are relatively new, has anyone experienced the fall out afterwards, i.e, being taxed on deficiency or chased after for the full deficiency? And does anyone know if the tax ramifications are the same for short sale and foreclosure? In other words, can they 1099 you for deficiency after a foreclosure?

Thanks, Michele

OCT

2008

i didn't know i had to print 20 pages to get your offer of a example of a hard ship letter-------you should tell people

and give them the option if they want the rest.i thank you for your letter!!

OCT

2008

Rosemary, this is a great sample hardship letter. It's probably one of the best I've seen so far and I've seen a lot in my line of work. The letter is very detailed and does a good of describing the difficult circumstances leading up to the homeowner's mortgage default.

DEC

2008

Great post . .thank you

MAR

2009

Rosemary, what do you do when an owner abandoned the home and left the tenant inside for the past two years. The tennant continued to lived for free and did all the repairs and posted a lien on the home for the cost of repairs. Now, he does not wants to move but wanted to buy the home. So he hired my office to help him get the home. How do I go about it. How do I get a short sale payoff (SPO) for this home. I have all of the owners pertinent information, but I do not know where they are.

MAY

2009

Thank you for the sample letter to share with my cliant!

Charlene - I am so glad this is useful. Thanks for the kind words.

MAY

2009

Hi
In 2005 I purchased a property in California as primary residence. I have a first loan for 340K and 2nd for 90K as a HELOC with the same lender. The loans were "puchase money" loans. After living in the house about 1 year I bough other property in California and I rented out the first one. After a few months that I had a tenant, I cannot find a tenant for the property now . The area is hard hit by the falling home prices ad it is very hard to rent it out. (Stockton-California)
I contacted the lender- Country Wide and there advise was to do a short sale. The current market value is about 180 K.
My question is: Is the lender going to come after me for the difference?Am I going to have a 1099 send to IRS? Are these loans considered non-recourse loans?

Maybe somebody can help me with an answer.

Thank you very much,

Dewey Mann

JUN

2009

hello:

I want to share my personal story with anyone who is interested. I was a loan office in the retail housing market. about 6 months ago I was searching for a new job, any job just to somehow bring in enough money to meet my monthly bills.

I had been a few months behind on my mortgage and did receive a few letters from the lender.

I TRIED TO DO A SHORT SALE BUT THERE ARE SO MANY OTHER HOMES ON THE SHORT SALE MARKET THAT MY HOUSE JUST SAT AND I RAN OUT OF TIME"

two weeks ago I had a good friend visiting from Washington state. we were about to go on a hike and there was a knock on my door. I thought it was just some solicitor. I was going to get mad at the person because I have a sign on my front door "no solicitors".when I asked him what he wanted he said that the bank had sent him out to "change the locks on the doors". I was frozen with fear and felt sick to my stomach. I immediately tried to call the lender and after hours of endless waiting I was told that my house was scheduled to be sold in two weeks. The only possibility to save my home was to send them a cashiers check for $40,000. I was in a panic and my neighbor told me about a law firm that helped him. I did not even know that he was in trouble just like me.

I called this law firm and within two days they stopped the foreclosure and dropped my payment in half. the best thing is that to start the program I only had to come up with a certified check for around $900.00 which I sent to the bank.

The law firm was even able to work with me on their fees and allowed me to make a down payment to them. These guys were the best. they saved my life. I highly recommend that anyone in my situation give them a call. The guy that I dealt with was Daniel Cordova and his phone number is 818 419-2327. I hope that this helps anyone facing the same situation as I did.

thanks steve

JUN

2009

Dewey Mann,

My name is Mike. I was in the same situation as you . I called a gentleman that my co-worker referred me to (Javier 818-792-7704). This is what he sent me when I asked him the same question: "When funds are borrowed to buy a home it is considered a "purchase-money" loan. That makes it a non-recourse loan under California Law. If the borrower owes $300K on a home that's now worth $200K, the most the lender can do is take over the home. The Lender cannot sue the borrower for the difference". This guy was great. He answered all my questions and really worked his tail off to ensure tthat we didn't get screwed! He was able to help after a company took our money, promised to help and didn't do anything for us. My family is grateful to him.

Steve and Michael,

I'm glad you were helped successfully. Banks and the government have been pushing distressed homeowners to work with their lenders and to avoid third parties who offer loan modification services. However, many homeowners don't have much luck working with their lenders and, because they're afraid of being scammed, end up lost and hopeless not knowing where to turn. That's why there are lawyers. For all the bad (and unjust) press lawyers get they are still your best resource when you are faced with life-altering legal problems. It's amazing how many people turn to untrained, unprofessional, unlicensed scammers who charge exorbinant fees because they fear lawyers. As your stories demonstrate, you can get effective legal help for a reasonable price.

JUL

2009

Thank you Rosemary and other friends for sharing your situations and comments. I just comprised a "short sale" letter to my mortgage company. Everyone has a "story" so I won't bore you with mine. I just wanted to let everyone know that it certainly helps to know we are not alone.

AUG

2009

Hello Rosemary,

My husband and I are in the process of a short sale for our house which we live in: California. We are also trying to short sale our condo which has been rented out for the past 2 years. The offer to our house is less $368,000 from what we owe on both the 1st & 2nd loans with Bank of America. While the offer to our condo is $208,000 less than what we owe for the condo. I was told there are now loan forgiveness for owner occupied homes when short selling but for the condo will we be held responsible for that also? I feel like there is no way out & would like to claim bankruptcy since it seems liek we will not be able to get out of this financial mess that we have gotten into. Any information is greatly appreciated.

thanks

Janette, Many attorneys provide a free initial consultation to assess your situation and explain your options. Call some attorneys in your area and ask if they offer that to new clients.

OCT

2009

My business partner and I bought a one-family house together two years ago to change it to a two- family house. But he stopped paying his part of the mortage a few months after the closing because of his financial situation. The auction sale is 10 days away. We found a buyer, and the bank agrees to have a short sale.

I don't know if the reason (above) for hardship letter is valid. please advice.

Thanks

OCT

2009

Thanks for the Short Sale Hardship Letter example. My experience is that usually they don't want to read alot of details, just the facts. We have a list of several sample hardship letters that home owners have written as well.

http://activerain.com/blogsview/1307804/how-to-write-a-short-sale-hardship-letter

NOV

2009

The sample Hardship letters in this site are very good. There are very good posts in this site.

DEC

2009

Thanks for this post - good letter

Merry Christmas,

John

JAN

2010

Hi do you tell your the family on a short sale about the 1099-C. That the loss could be considered income.

Yes, because that is true depending on their situation. I do not tell them definely there will be one, I advise them to check with their tax professional. I am not one of those.

FEB

Great Letter. I also include a sample hardship letter when I give a lisitng package to Short sales. It is all about helping in a not great situation.

FEB

Thank you Bill, I do the same. Just had one yesterday. Its funny --- nowadays, most homeowners have done their homework and they have pretty good letters, reasons and stragegies all worked out!

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?

Rosemary Brooks-The Mother & Daughter Realty Team

Stockton, CA

More about me…

EMBARCADERO Investments - 866-543-0461

Address: 6777 Embarcadero Drive , Ste. 1, Stockton, CA, 95219

Office Phone: (888) 543-0461

Cell Phone: (866) 543-0461

Email Me

EMBARCADERO INVESTMENTS - the Mother and Daughter Realty Team. A Realtist. We take the extra steps to ensure our clients receive the utmost care! Call 866-543-0461 ~~~~~~~~~~~~~~~~~

Real Estate Advice & Opinions

Get this Widget

Visit REOPRO

Search Stockton Real Estate

DISCLAIMER: I must disclaim liability for any damages or losses, direct or indirect, that may result from use of, or reliance on, any information contained in this blog, or for the accuracy of comments or opinions expressed by visitors to my blog. The information contained in the articles is deemed reliable but is not guaranteed, and the opinions expressed in these articles are mine.

Listings

Links

Archives

Find CA real estate agents and Stockton real estate on ActiveRain.

Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.