Don’t Say These 7 Things in a Short Sale Hardship Letter

Short sales — when a lender works with borrowers in financial trouble to sell their homes for less than their unpaid mortgage– account for a small percentage of home sales each year. If you have found yourself dealing with divorce, death, medical emergencies or job loss then you could be in a situation where you need to work with your bank to put your home up for a short sale.

One of the first things a lender will require is for the homeowner  to write a letter providing proof of their financial hardship along with documentation to back up your claim. You can visit our other article following for the in’s and out’s of the best things to do when writing that short sale hardship letter. For a list of things you do NOT want to include in a hardship short sale letter, read below.

1- Keep it Brief

More words won’t necessarily help your cause. An effective short sale hardship letter should be kept to one type written page. With the recent pandemic putting more people out of work your lender might be dealing with a higher-than-normal amount of short sale letters. Don’t get yours shoved to the bottom of the pile because it is long-winded and overly wordy. Lenders don’t need your life story, they need a clear and concise description of the hardship you’re facing, an explanation of how you’ve tried to solve the problem and why the short sale is the only realistic option for you.

2- Don’t Make it Hopeful

A short sale hardship letter is in effect a persuasive letter to negotiate a short sale because you cannot make your mortgage payments. When you invite some hope in to your letter — for example, implying that you believe the financial troubles will only be temporary — then the bank is not likely to approve your short sale. You might have hope that your finances will improve soon but your lender will not move forward with a short sale if your situation is only temporary. Banks approve these types of sales when it is clear that the financial situation of the homeowner won’t improve any time soon and that a short sale is a better option than letting the property fall into inevitable foreclosure.

3- Don’t Write Too Soon

If you are up-to-date on your mortgage payments the bank is not going to believe your reason for financial hardship or take it seriously. If you are the type of person who wants to take quick preventative action when things go awry that is great, but you’ll have to wait until your money problems are bad enough that you miss a payment or two before convincing the bank that the short sale is your only option. Specifically mentioning missed payments in your hardship letter is helpful to show that your situation is dire enough that you cannot currently make your mortgage payments.

4- Don’t Mention Any Available Outside Money

If you have a family member you don’t feel comfortable asking for monetary help, don’t mention it in the letter. This may seem obvious, but saying something like “Asking my parents to help me out financially doesn’t feel right because they are already helping out my sister,” won’t help your case. If the lender thinks your parents could possibly help you out then they will not be as likely to approve the short sale. The lender needs to see that you have exhausted all of your resources and that is why you should approved for a short sale.

5- Don’t Write About Questionable Activities

If any part of your financial hardship is related to gambling, drugs or alcohol or jail time you’re not going to have an easy time convincing the lender to work with you. The lenders are more willing to consider short sales if the homeowner has been responsible, can show they are trying to pay their debts but have no other recourse than a short sale. When a lender receives several letters asking for a short sale, the letters that need help due to job loss or medical emergencies are more likely to get approved.

6- Don’t Blame Your Lender

A hardship short sale letter should not be the place to point fingers and list all your grievances with people, the economy, your boss or anyone else who has wronged you and led to your financial situation. Sending anger and blame to your lender is a definite no-no if you’re asking for help and consideration. Even if you do feel frustrated or wronged by your lender, don’t use your letter to express yourself in that way. Keep your details factual and without negative emotion to be seriously considered for a short sale.

7- Don’t Just Use a Short Sale Hardship Template

Your short sale letter won’t be read by a robot so don’t use a one-size-fits-all template to appeal your case. You are writing to a human being, describing your unique situation and your letter should reflect that. Templates however can be very helpful tools. They let you know the format for your letter and can give you an idea of how to write one and how long they should be. Short sale hardship templates should not be used as your actual letter by copying and pasting in your name and the banks name.

If you don’t know where you start you can check out our template, but remember to use it as an example and reference, not as a word-for-word guide for your own letter.

Final Tips For a Successful Hardship Short Sale Letter

When writing your letter focus on being brief, clear and concise. Clearly state your claim and provide proof of how circumstances are beyond your control and how there is no hope of your situation turning around quickly. Always be truthful and professional. A hardship letter can be considered a legally binding document after all.