Sample Hardship Letter Requesting a Short Sale

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What is a Short Sale?

According to the National Association of Realtors, a short sale is "a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan."

For example, John owes $150,000 on his mortgage, but his home is only worth about $100,000. John's realtor lists the house as a short sale, with a price of $105,000. A full price offer is made, and the bank accepts the $105,000 as a payoff for the $150,000 loan, even though the payoff is less than the balance due on the loan.

Because of the recent housing crisis, many homeowners are considering short sales as an alternative to staying in a home that has plummeted in value. At some point during the short sale process, the homeowner will be required to write a hardship letter to their mortgage lender, detailing his or her financial circumstances. In a way, this letter is a plea from the homeowner, asking the lender to agree to sell the home for less than the owed amount.

The financial hardship letter should be very detailed, but brief.  Keep the letter to less than a page in length. Write with emotion.  Include any of the following that apply to your situation:

  • Reduction in income
  • Medical bills
  • Job loss
  • Increased insurance costs
  • Reliance on credit cards for daily living expenses
  • Job transfer
  • Single parenthood

Sample Hardship Letter

December 2, 2010

To Whom This May Concern:

Re: BofA Home Loan #123456789 (Request for Short Sale)

We are contacting you today to request a short sale for our property located at 12345 W. Carmen St., Denver, CO, 80012. We appreciate the opportunity to explain the circumstances that have caused our finances to be incredibly strained.

In December 2005, we purchased our home for $368,000 with a down payment of $90,000. There was an additional $8,000 in closing costs. Due to the dropping of home prices that have affected the entire country, we currently owe more than our home is worth, and our $90,000 down payment is long gone. Since the purchase of our home, our financial circumstances have changed, mainly due to health insurance costs and medical bills, reduced monthly income, and the births of four children.

When we purchased our home in December of 2005, we were paying $50.00 per month for health benefits through my husband's employer. Over the course of five years, the cost of our insurance premiums steadily increased . At the beginning of May, 2010, the premium was scheduled to increase again to $812 per month. Medical bills are also causing a financial burden. In the last twelve months, we spent $5564 on unexpected medical bills for our kids. This caused a huge financial strain for us.

In addition, my take home pay has decreased tremendously over the last five years. When we bought our home in 2005, my income was $43,200 per year. My gross pay for 2010 was only $14,657. That is a $28,000 loss of income. My husband has not received a raise in pay since May 2007.

We have had four children in the last five years. This has led to increased household expenses in areas such as clothes, food, utilities, and so on. We spend approximately $70.00 per month on diapers for the two youngest children. We anticipate our child-related expenses will steadily increase as the children grow.

Although we have done everything possible to improve our financial situation, our expenses are higher than our income, and we are short on money every month. Please consider allowing us into your short sale program. We appreciate your help in this matter. If you have any questions, or need anything from us, please call 999-456-7890.

Thank you,
The Miller Family

Be courteous and make it clear that you are willing to work with your lender on a solution. Threatening to stop payments or foreclose won’t help at all.  Leave your contact information and make sure to say thank you. Kind words go a long way, even with the big bad mortgage companies!

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Comments 6 comments

A.A. Zavala profile image

A.A. Zavala 5 years ago from Texas

Outstanding template to follow, thanks for sharing.


shawna.wilson profile image

shawna.wilson 5 years ago from Arizona Author

Thank you AA Zavala. I hope it helps someone!


prairieprincess profile image

prairieprincess 5 years ago from Canada

This is very useful ... thank you.


shawna.wilson profile image

shawna.wilson 5 years ago from Arizona Author

You're welcome, Prairie princess!


breathe2travel profile image

breathe2travel 5 years ago from Gulf Coast, USA

Your hub should prove helpful to a lot of people. Well written. (Of course!)

Voted up & useful.

Warmest regards~


moonlake profile image

moonlake 4 years ago from America

Good information it will help lots of people I'm sure. Voted Up.

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