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

It’s a troubling statistic for many Utah residents to face but Utah is among the top 5 USA states with the highest debit-to-income ratio of 1.83 (Hawaii is #1). As of 2023, Utah’s average debt per capita is $64,567. The average student load debt for Utah residents is $26,307, among the highest.

There’s a strong chance that many of you reading this right now may hold some of that debt burden 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 is an affidavit of hardship?

An affidavit of hardship is a formal legal document that serves as a declaration made under oath, outlining the challenging circumstances a person or entity is facing. This document is often utilized to provide a comprehensive overview of the financial, personal, or other significant difficulties that an individual is encountering. It aims to present a clear and transparent picture of these challenges to relevant parties such as courts, financial institutions, or governmental bodies.

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​

Writing a Single Mother Hardship Letter

I have worked with many single mothers who face financial challenges so if that’ you this section will help you.

A single mother hardship letter is a very similar to what I’ve already discussed but there are some differences that I’ve listed below:

To create a single mother hardship letter that resonates, certain essential elements must be included to paint a comprehensive and sincere picture of your situation:

  1. Introduction and Personalization: Begin the letter by addressing the recipient and introducing yourself. Mention any relevant details about your relationship with the organization, such as account numbers or case references.
  2. Candid Explanation of Hardships: Detail the challenges you’re facing as a single mother. Whether it’s a loss of income, medical expenses, or childcare concerns, provide a candid and transparent account of how these hardships are affecting your ability to meet financial commitments.
  3. Impact on Children: Emphasize the impact of these challenges on your children’s well-being and future prospects. Explain how any potential relief or assistance would directly benefit your family’s stability and the opportunities available to your children.
  4. Supporting Documentation: Attach relevant documents to substantiate your claims. These could include medical bills, income statements, or legal documents that validate your circumstances.
  5. Specific Requests: Clearly outline the assistance, understanding, or accommodations you are seeking. Whether it’s a request for flexible payment arrangements, a reduction in fees, or extended deadlines, specify how you believe the recipient can help alleviate your situation.
  6. Expression of Commitment: Express your commitment to overcoming these challenges and your willingness to work collaboratively with the recipient to find a mutually beneficial solution.
  7. Gratitude and Professional Tone: Conclude the letter with a tone of gratitude for the recipient’s time and consideration. Maintain a professional and respectful tone throughout the letter.

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.

What Not to Say in a Short Sale Hardship Letter

1- Keep it Brief

More words won’t necessarily help your cause. An effective short sale hardship letter should be kept to one type written page. With the recent pandemic putting more people out of work your lender might be dealing with a higher-than-normal amount of short sale letters. Don’t get yours shoved to the bottom of the pile because it is long-winded and overly wordy. Lenders don’t need your life story, they need a clear and concise description of the hardship you’re facing, an explanation of how you’ve tried to solve the problem and why the short sale is the only realistic option for you.

2- Don’t Make it Hopeful

A short sale hardship letter is in effect a persuasive letter to negotiate a short sale because you cannot make your mortgage payments. When you invite some hope in to your letter — for example, implying that you believe the financial troubles will only be temporary — then the bank is not likely to approve your short sale. You might have hope that your finances will improve soon but your lender will not move forward with a short sale if your situation is only temporary. Banks approve these types of sales when it is clear that the financial situation of the homeowner won’t improve any time soon and that a short sale is a better option than letting the property fall into inevitable foreclosure.

3- Don’t Write Too Soon

If you are up-to-date on your mortgage payments the bank is not going to believe your reason for financial hardship or take it seriously. If you are the type of person who wants to take quick preventative action when things go awry that is great, but you’ll have to wait until your money problems are bad enough that you miss a payment or two before convincing the bank that the short sale is your only option. Specifically mentioning missed payments in your hardship letter is helpful to show that your situation is dire enough that you cannot currently make your mortgage payments.

4- Don’t Mention Any Available Outside Money

If you have a family member you don’t feel comfortable asking for monetary help, don’t mention it in the letter. This may seem obvious, but saying something like “Asking my parents to help me out financially doesn’t feel right because they are already helping out my sister,” won’t help your case. If the lender thinks your parents could possibly help you out then they will not be as likely to approve the short sale. The lender needs to see that you have exhausted all of your resources and that is why you should approved for a short sale.

5- Don’t Write About Questionable Activities

If any part of your financial hardship is related to gambling, drugs or alcohol or jail time you’re not going to have an easy time convincing the lender to work with you. The lenders are more willing to consider short sales if the homeowner has been responsible, can show they are trying to pay their debts but have no other recourse than a short sale. When a lender receives several letters asking for a short sale, the letters that need help due to job loss or medical emergencies are more likely to get approved.

6- Don’t Blame Your Lender

A hardship short sale letter should not be the place to point fingers and list all your grievances with people, the economy, your boss or anyone else who has wronged you and led to your financial situation. Sending anger and blame to your lender is a definite no-no if you’re asking for help and consideration. Even if you do feel frustrated or wronged by your lender, don’t use your letter to express yourself in that way. Keep your details factual and without negative emotion to be seriously considered for a short sale.

Gary Parker

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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