Usually, before a bank will approve your short sale request, they will ask to see your hardship letter. For many, the hardship is purely financial, but this is not always the case. There are many situations that can qualify as a hardship. If your situation has significantly changed in any way since you first signed the loan on your home, you may be able to qualify for a hardship.
Here are some of the most common reasons accepted as hardship:
Unemployment (loss of income)
Reduced income (new job, partner’s loss of job, furlough or pay cuts)
- Illness or medical emergency (causing lack of work and pay)
- Job transfer (voluntary or involuntary)
- Divorce, separation or marital difficulties (leading to reduced income)
- Abusive mortgage terms (such an adjustable-rate loan)
- Military service (often requiring changes in living situation)
- Death in the family (particularly an income bringing person)
- Incarceration
- Increased expenses and excessive debt
- Unexpected repairs or home maintenance
In your short sale hardship letter, three things must be included.
How you got into your present situation (divorce, job loss, etc)
What you have done to try to get out of this situation (balance debt, get another job)
Why this situation is permanent and unchangable (divorce is final, no jobs comparable to your old one are to be found)
Remember, the reason you are writing a hardship letter is because you have reached the end of the line and you need to get out from under the property NOW. Your future hopes and dreams are your business, not the bank’s, and you’ll do best to stick with “just the facts, ma’am.”
Be specific. Include numbers, percentages and figures. “I borrowed $6,000 against my Mastercard account over the past 4 months to help make up the mortgage payments, and they will be charging me 12.5% interest on that debt. I am now maxed out on all of my cards and have no further resources against which to borrow.”
Have your short sale specialist look over your short sale hardship letter and make sure it passes muster before submitting it to the bank. A well done letter could be a big step towards having your short sale approved!