Despite the recent improvement of our housing market on a national level, a high percentage of home owners still find themselves in a negative equity position where they owe more than the value of their home. If you are in a difficult financial situation like much of the country, a short sale may be the only alternative to a foreclosure. We do have a saying we use in the business, "a short sale is only for those that HAVE to sell, not for those that WANT to sell". In a short sale, your lender will require you to prove your financial hardship, and the short sale hardship letter is a critical piece of required documentation.
What constitutes a "financial hardship"?
- Loss of employment or reduction in income
- Death in family or major unexpected medical expenses
- Relocation or Job Transfer
- Increased bills or expenses
- Major repairs needed to property, without resources to pay for them
By the time a home owner is considering a short sale, most have already done a "band aid" loan modification, either a forbearance or repayment plan, which is a temporary solution to a long term problem. If you have already written a hardship letter for a loan modification, you will need to write a new one that is more specific to a short sale.
Here are some common things that a short sale hardship letter should and should not contain:
- The hardship letter should be signed and dated
- Reference the property address and loan number in the header
- It should be short and to the point, 5-10 sentences in enough
- State your hardship, and the circumstances that led you no longer being able to afford the property
- Make a strong case and relay the desperation of your case
- Do not blame your lender for your circumstances
- Do not write to much, they don't have the time to read it
- End the letter with something like "a short sale seems to be our only solution to avoid foreclosure" or "please consider a short sale on our property, we can find no other answer to our circumstances"
- Again, don't forget to sign and date it!
While you may be stressed from the financial situation in your life, know that this is only a temporary season in your life. All things come to pass. While the short sale process is anything but "short", you can recover your credit and be ready to purchase a home again in as little as 18 months.
In a short sale, it is important to have an experienced agent to guide you through the short sale process. ALL traditional closing costs are paid for by your lender in a short sale, including your real estate brokerage fees. To find a local short sale Expert who will help you with the process at no cost to you, visit www.short-sale-specialists.com. That site is also a top resource for anything related to short sales including other required documents, and lender specific guidelines and contact information.