How To Write A Short Sale Hardship Letter (With Template)

How To Write A Short Sale Hardship Letter

How to Write a Short Sale Hardship Letter

It’s a troubling statistic for many Utah residents to face. But in 2018, Utah’s total household debt exceeded $128 billion. And 77 percent of that deficit was the result of mortgage debt, ranking Utah # 10 in the nation for states carrying the most real estate debt.

There’s a strong chance that many of you reading this right now may hold some of that $128 billion and are facing the equally unpleasant reality of being forced into a short sale rather than face foreclosure. For this, you will need a short sale hardship letter.

It’s a reality that’s just not unpleasant to face. It can be downright humiliating. But it’s a necessary hardship you’re not alone in. Hundreds of thousands of Utah residents face the same dilemma every year. And one of the chief ways to satisfy lender demands without facing foreclosure is to learn how to write a short sale hardship letter for short sales.

Why Should I Sell My House In A Short Sale?

A short sale occurs when a property is sold for less than the amount of the balance owed on a mortgage with all proceeds of the sale going directly to a lender. It’s typical for lenders to demand that a homeowner qualifies for a financial hardship prior to approving a short sale. This is where a short sale hardship letter comes in to play when trying to stop foreclosure.

There’s numerous extenuating circumstances for claiming financial hardship. Unfortunately, not all of them can qualify you. Banks aren’t necessarily the most sympathetic people on the face of the planet, as many homeowners can attest to. Many would rather place a home into pre-foreclosure than to accept a short sale because it’s more profitable to do so.

But banks aren’t necessarily the heartless ogres you assume them to be, either. More than a few are willing to work with homeowners during temporary crises in order to delay the foreclosure process altogether. But you still may find yourself facing irreconcilable circumstances. Some of the more common qualifying financial hardships for short sales can include:

  • Divorce.
  • Family death.
  • Job loss.
  • Job transfer.
  • Medical emergencies.
  • Natural disasters.

What Is A Hardship Letter For Short Sales?

During a short sale, it’s common for a lender to insist that a homeowner provide proof of their financial hardship by both attesting to it in writing and providing any necessary documentation to justify their claim. A short sale hardship letter is used to prove just what circumstances necessitate a short sale to a bank’s loss mitigation department.

If this seems like unnecessary red tape, keep in mind that a short sale actually means that a bank is losing money by conducting one.

Your personal mortgage representative may be understanding of your circumstances for claiming financial hardship. But that doesn’t mean a loss mitigation specialist will be. They might see dozens of financial hardship letters for short sales every single week, and they’re going to want to see concrete and legitimate evidence backing your claim.

What Should I Include In My Hardship Letter For A Short Sale?

Keep in mind that it’s a legal representative who’ll be approving your short sale, so it’s important that you keep your hardship letter brief, concise and stating plain, objective facts. They’re not interested in playing a blame game or fielding complaints about exorbitant interest rates—chances are their customer service department has already fielded more than their fair share of the latter. What they want is documentation and persuasion.

You’ll typically be asked to provide financial documentation in your hardship letter, including your most recent bank statement, job termination statements or medical bills (if applicable), tax returns and current wage statements.

In addition, you may find it worthwhile to include: copies of both your most recent mortgage payment as well as a recent mortgage bill to help justify your claim. If applicable, bankruptcy notices, credit reports, federal disaster notices, legal notices, medical specialist statements, student tuition bills and unemployment statements can also provide additional testimony of hardship in a short sale.

Tips On Writing A Hardship Letter For A Short Sale

  • Always include your name, address, phone number, email, loan number and the date.
  • Do not make unrealistic claims indicating you expect your financial circumstances to improve shortly. Remember, a hardship letter justifies the legal sale of your home.
  • Explain your financial hardship during the first paragraph and how it specifically prevents you from fulfilling your mortgage payments,
  • Do not include abusive, accusatory, defamatory or otherwise demeaning language in your hardship letter.
  • Try to emphasize that circumstances were beyond your control and you made every possible effort to fulfill your obligations. Your short sale is a last resort prior to the foreclosure process.
  • Do not attempt to garner the lender’s sympathy by long-winded explanations of your given circumstances.
  • Always keep in mind that a hardship letter can be considered a legally binding document that could be entered into bankruptcy proceedings at a later date and should be crouched in formal but straightforward language.

An Example Of A Short Sale Hardship Letter

John Smith
555 Anonymous Rd
Salt Lake City, UT 84101
Loan Number: 1234567890


Utah State Bank
1234 Utah Way
Salt Lake City, UT 84101

RE: Financial hardship facilitating a short sale of property

Dear Sir or Madam:

This letter is a formal request to short sell my house due to financial hardship.

Company downsizing at my place of employment effectively eliminated my position, resulting in my inability to make mortgage payments for the past six months. While I recently obtained another position elsewhere, my salary is substantially less than what I was previously earning, as the enclosed attachments will indicate. Should the short sale of my house be approved, I can subsequently avoid foreclosure proceedings.

As much as I would like to maintain my financial obligations with you, present circumstances do not allow me to. I believe the only viable solution which would best suit our mutual interests would be a short sale. Considering the house is in excellent condition and could easily be sold for market value,.I believe a buyer could be found promptly rather than face any lengthy foreclosure proceedings.

I appreciate your time in considering my request. If you have any questions or need further documentation, I can be reached at (555) 555-5555 or


John Smith
Loan Number: 1234567890
Utah State Bank
List of Enclosures​

What If My Hardship Letter Is Rejected?

Whether or not your short sale hardship letter is accepted depends on both your given circumstances and official bank policy. However, the foreclosure process can frequently be a lengthy one; one which can take months on end to execute.

Subsequently, most lenders will be happy to work with you to find an alternate payment solution. But they may not always accept your hardship letter. And you may find that locating the right buyer can be more trouble than you initially expected.

At Gary Buys Houses, we’ve been saving homeowners from the added humiliation of foreclosure for over a decade. We’ll purchase your home as is, sometimes in as little as 3 – 5 business days. Not only can we work with lenders to find a viable solution that can save you from the foreclosure process, but with our “Sell Now, Move Later” program, you can continue to stay in your house as long as it takes you to relocate.

Yes, mortgage debt can be tough to live with. But you’re also not alone. Not just in Utah, but all across America. And sometimes, there’s a friendly hand to pull you out of the hole if you know just where to look.

Please call or text 801-382-9199 or use the form 👇 to contact me.


I was a part owner in an electrical contracting firm in the late 1990’s and started to get interested in real estate around 2001. My business partner and I bought our first rental property in 2002. From there we did several real estate transactions until we decided to close the electrical business and part ways. In 2009 I started Gary Buys Houses which is owned by my wife, Eileen, and I. I felt like I could offer one on one personal service to people that wanted to sell their house quickly or not worry about repairs and such. Today, I have built a reputation of being fair and honest with people no matter their situation, so the business continues to help people and be successful. I have been married for 34 years, and have one son, two step sons and 4 grandchildren. I like to travel and spend time in Southern Utah exploring.

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