How to Write an Outstanding Hardship Letter for a Short Sale


Jackie called in a panic this morning.

“I can’t tell the bank what happened to me, it’s too embarrassing!” she said. “I don’t even know where to begin.”

Having just been served a double whammy in her personal life, a divorce and a bankruptcy discharge, she hadn’t even begun to process what happened.  Trying to write it all down on paper was an impossible task.

“There’s no way I can explain what happened, and I’m not going to share personal details with my lender!” she said.

What the bank really wants in a hardship letter
Jackie did the right thing by reaching out for help.  The short sale process is complicated enough without stressing over a hardship letter.  Plus, she is correct, there is no need to share the personal details on a hardship letter, but one still needs to be written and submitted to the lender.

“Jackie, you don’t have to go into the details of why your marriage was dissolved, only that the divorce was completed.  However, it was due to the divorce that you could no longer afford the mortgage on your home.  The bank wants to see how  you got into the financial distress, what changed about your situation, not the intimate details,” I said.

The bank wants to know the general situation that brought the home owners to the current position, not a detailed version of the private events.  If a couple is divorcing, for example, the there is an obvious financial change when one household splits into two, which in turn can affect the mortgage affordability.  Jackie just needed to provide an overview of her own situation to appeal to the lender’s hardship requirement.

We talked it through and came up with a short summary, that was much easier.  Jackie wrote up the simplified letter and left the anxiety behind.

“This really helps, thanks for getting this sorted out,” Jackie said.  “I’ve been stressed enough for 10 people is seems, so having this done right makes me feel better.”

Sample Short Sale Hardship Letter
Here’s a sample of the letter I gave to Jackie to help her outline her thoughts for describing her hardship.


To Whom It May Concern:

This is a very difficult thing to write.  I have always been able to pay my debts in the past and I am truly sorry that I cannot do so now.

I lost my job as a manger for a large home improvement company.  I have been unemployed for six months.  I have been receiving unemployment benefits.  However, my unemployment checks replaces about one quarter of my previous income.  My husband is a stay-at-dad responsible for our four children.  Our credit cards are maxed out and we are in the process of filing for divorce.

We can no longer afford to make the $1,800 monthly mortgage payment on our home.  We are currently five months behind and see no way to make up the $9,000 in back payments.  Our real estate taxes are also due and we have no way to pay those either.

We have agreed to sell our property for $275,000.  It has been on the market for over 60 days and this is the only offer we have received.  We have exhausted all of our options.  We want to avoid a foreclosure sale that will further damage our credit.  We respectfully  request that you consider this offer and work with our agent to negotiate a short sale transaction.


Mr and Mrs. Smith

Why a hardship letter?
A hardship letter is a often a requirement of the lender’s paperwork.  The bank is only looking for a reasonable explanation for the cause of the financial distress, along with an attempt to rectify it in good faith.  Offer a clear, concise, snapshot of your personal situation and how it developed.  Be honest because the banks prefer the truth up front and with full disclosure.  Many times, folks make this simple letter a difficult hurdle to overcome.  There is no need to work on this alone.  Ask us how to write up an appropriate letter and we’ll be happy to assist.

Questions about the short sale process?


What’s a valid hardship?
Lenders have a list of specific hardships that qualify for a short sale.  These include:
Job relocation of at least 50+ miles
Natural disaster
Business failure
Loss of hours
Health insurance increase
Increase in mortgage payment
Divorce or death of spouse
Illness or medical costs

Invalid Financial Hardships:
Increase in family size
Desire to resize home (downsized or larger space)
Loss of equity in the property
Excessive discretionary spending (credit cards maxed out)



Did you know?  
In addition to short sales, Fox Valley Short Sales offers full broker service for regular and distressed listings, for all buyers and home sellers, rentals, as well as investors in residential properties across the northern Illinois and Chicago region. All team members are trained to coordinate short sales effectively and retain the full skills and expertise of fully licensed Realtors®, including access to the resources of the local Illinois MLS database.

For more information and details on short sales and more, please contact Jennifer Kinzle, 630-854-4360. Email me direct to get on track for 2016.


Contact me:

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Direct/Text:  (630) 854-4360
Facebook: Fox Valley Homes – Jennifer Kinzle, Broker
Fox Valley Investors Group: Fox Valley Investor Group – on Facebook
Twitter: @jkinzle
Instagram: @jkinzle
MeetUp: Fox Valley Investors MeetUp Group




Charles Rutenberg Realty of Illinois
1733 Park St, #150
Naperville, IL 60563
LIC 481.010.165

One thought on “How to Write an Outstanding Hardship Letter for a Short Sale

  1. Pingback: 10 Reasons for a Financial Hardship for a Short Sale | Homes in the Fox Valley

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