April 18, 2011

How to write a Short Sale Hardship Letter for A Bank as Part of the Short-Sale Process

If you're planning a short-sale, one of the steps that you will need to do is to write a Hardship Letter. Other steps you will need to do are posted at my Short-Sale Overview

Hardship Letter Basics

A Hardship Letter is usually part of the package that a potential short seller must put together for the bank. Hardship letters describe the sellers current

financial condition, and usually those choices involve the situations that have lead to the need to sell the home and not pay the bank. These letters are used by the bank to determine, primarily, that a short-sale is in the banks best interest, as given the information in the short-sale, they will likely be foreclosing soon.

Reasons to Think about the Hardship Letter ahead of Time

Not everyone can get a short-sale done. If you have substantial assets that the bank can find, it's unlikely that they will just let you get out of the mortgage and have the bank pay the bill. Fundamentally, you will need to demonstrate that the property is causing you a hardship, and selling the property is the best way to relieve that hardship. It's a good idea to talk to an attorney who has handled short-sales successfully to make sure that your situation is likely to be considered a hardship, and an attorney can assist you in making sure the Hardship letter contains the information that the bank requires.

A Hardship Letter is a Math Problem

Hardship letters are not emotional letters about how the bank should relieve you of your obligations because you are in desperate straights. Remember, the bank's decision to accept a short-sale arrange for them is a math problem - it's simply the cheapest way for them to get out of an under performing asset. Your hardship letter

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should also be math oriented, focusing on your assets, your income, your debts, and your cash flow. The more likely it looks like you are in a financially untenable situation, the more likely the bank will consider a short-sale. That doesn't mean you should overstate the situation, remember, banks have ways to check many aspects of your financial situation, and the hardship letter should just help them connect the dots.

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*All information is posted in good faith and is assumed to be reliable, but may rely on third party information sources.

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April 18, 2011

How to write a Short Sale Hardship Letter for A Bank as Part of the Short-Sale Process

Hardship Letter Basics

Reasons to Think about the Hardship Letter ahead of Time

A Hardship Letter is a Math Problem

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