How to Write a Hardship Letter for a Short Sale to a Financial Institution

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When asking your mortgage lender to approve the sale of your home for less than you owe, you’ll be sent a short sale package to complete and return. Part of the information the lender is looking to understand is how you got to the point where you can no longer afford your mortgage payment. This piece of the package is known as the hardship letter, and your response may mean the difference between approval or rejection as a short sale seller.

Locate the person handling your property in your lender’s loss mitigation department. Keep calling until you’ve reached the one person who can help you. Write down the agent’s name, department, address and other information necessary to open a line of communication. Ask that a short sale package be sent, including authorization allowing your real estate agent to act on your behalf and full instructions on the hardship letter you must write.

Address the letter to the proper name of your asset manager, and limit its length to one page. Use a businesslike and cordial tone while maintaining your dignity. Write in a tone that conveys your despair without the melodrama. State that you never expected to be in this situation and being financially unable to meet your obligations wasn’t something you planned, as you honor your debts.

State the reason you can’t pay the mortgage. Mention the cause -- a job transfer resulting in having to sell your home in a declining market, death of an income provider, divorce, a change in income, illness or unexpected medical costs. Be prepared to back up your claim with evidence.

Mention whether your hardship is short-or long-term and if you expect it to be resolved within a specific period of time; the lender may agree to a loan modification instead of losing your home to a short sale if it sees a positive future.

Request permission to begin the process of a short sale to avoid having a foreclosure on your record. Let the lender know your intent was to remain in your home if circumstances hadn’t changed. Tell the lender you’ve tried to sell your house at full price but no offers came in and a short sale is your next step.


  • Don’t download an Internet template; asset managers read hardship letters every day and recognize one that’s been copied over and over.

    Don’t expect the lender to agree to your short sale if the sole reason for your hardship is that the value of your home has fallen; that doesn’t affect your ability to pay.