What Should You Say In Your Short Sale Hardship Letter?

As a California short sale Broker, this is one of the most common questions I’m asked by potential short sale sellers. I am also a California attorney and all the legal ramifications of a short sale certainly are at the top of the list but assuming the legal questions are answered then the hardship letter is the next challenge to face.  Some short sale sellers tend to put off and put off writing their hardship letter.  It is different than a loan modification hardship letter, where the purpose is to indicate that you have it hard but you can still afford to stay in the home if your lender makes a few changes to your loan.  The short sale hardship letter’s purpose is to tell your lender that you can’t afford your house and you need to sell it.  Many short sellers have a difficult time writing about the fact that they cannot afford their home. Others want to criticize their lender placing the blame on the lender for their current situation. This is not recommended and while it might “feel good” to do that it does not add value to the hardship letter. The hardship letter for some people can easily become the never ending diatribe. Refrain from revenge no matter how good you think it might feel.
My advice is to not make the short sale hardship letter any more difficult that it needs to be.  The basic format is to first write about when you purchased the home and what your financial situation was like at that time.  Usually, there was an event or trigger that then led to the financial difficulty, unemployment, reduction in hours, increase in expenses, etc. Write about that event or series of events and when they began.  Be fairly specific about the impact to your income and expenses. Hardships come in many shades of gray and the lender just needs to be satisfied that there is “some” hardship. It can be as simple as the need to move closer to your job to save money on gas because of the cost of gas and the distance you currently travel. The strongest hardship is financial struggle but again that can come in many forms. We will personally talk to you about your situation and guide you in this area if you need help.


Do not discuss how much up side down your mortgage is. The bank knows this and is not relevant and should not be addressed in the letter.  The short sale hardship letter does not need to be long.  Most short sale hardship letters that we review are one page in length.  They should be signed and dated and list the loan number and property address.
Before deciding whether to short sale your home, it is essential that you obtain legal and tax advice, and consult with an experienced short sale agent. I am both a California Attorney and Real Estate Broker. We handle short sales all over the state and it all stays under one roof giving you benefit of getting your legal advice while at the same time having your real estate needs met by an expert in the field. If you would like a free consultation please call me at 916.442.6400 or go to my website: www.upsidedownca.com. I look forward to talking you to soon.