How to Write a Hardship Letter That Gets the Bank to Say \\
A well-crafted and ironclad hardship letter is probably one of the biggest components to getting a short sale approval from the bank. Without clear description of the dire straights the borrower finds themselves in, no lender will willingly short the loan. So how do you go about writing a letter that will get the bank's attention? Whether you are writing your own letter or helping a homeowner write a letter, here are some things to consider:
1. The Reasons for the Hardship
In any case, you first need to compile and assess what the most compelling reasons for hardship are. Put yourself in the bank's position as a lender. If there is a way you can make the mortgage payment,they are not going to allow a short on the loan. So be very clear what circumstances have are making it impossible to keep up with the mortgage payment.
2. Be Specific about your Hardship
Secondly, you need to demonstrate how this hardship impacts your ability to make a mortgage payment. If you make $8,000 a month and your mortgage went from $1000 per month to $1500 per month; good luck getting them to approve a short sale! You need to show how the hardship pushed you outside of your ability to make the payment.
Banks often think of mortgage payments in terms of percent of gross income, so you might consider using this. Let's demonstrate with an example. Assume your mortgage payment is $1700 per month. Your household income was $5000 a month and then you lost your job, and the new household income is $2200. This means that your mortgage payment went from a reasonable 34% of your income to a whopping 77% of your income. Any bank will look at that number and say, "Yikes!"
3. Gather supporting information and Market Conditions
Think about circumstances outside of your own that are impacting your market area. Remember, the bank will want to be certain other options have been exhausted - such as selling your house. You will need to show that this is also not an available option. This can be done by doing things like:
4. Writing the Letter
Keep it in easy to read paragraph format.
The layout of your letter should look something like:
Send the letter to the appropriate party (bank, attorney, investor, or real estate agent you are working with).
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ABOUT THE AUTHOR
Nick Reuter is the owner of Short Sale Artisan, a web-based short sale platform that helps agents and investors on top of their workflow by quickly and easily calculating offers, generating documents, finding new leads, secure financing, and much more.
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