When a bank or other mortgage holder agrees to sell a property for less than what is due on it, it is known as a short sale. Obviously, this is not the preferable option for a lender because it leaves them without the property as security and a loan sum due.
In some cases, though, a homeowner may be able to persuade the lender that a short sale is in everyone’s best interests. To initiate a short sale, the homeowner must often submit a short sale package that includes, among other things, a hardship letter outlining the specific reasons for the request.
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The trick, as with any letter, is to figure out what to include and what to leave out. Here are seven things the bank does not want to see when writing this type of letter.
Nip Hope In The Bud
It is not in your best interests to hold out any hope for the future when requesting a lender to consent to a short sale. To put it another way, don’t express any expectation (false or otherwise) that your financial condition will improve.
You must represent that you are going down the tubes and will not stop until you SPLAT on the bottom in order to obtain short sale permission.
Consider the scenario from their perspective. Why authorize a short sale if the original borrower may be able to restart mortgage payments at some point in the future?
Don’t Admit To Stupidity And Addiction
Many people find themselves with an underwater mortgage as a result of circumstances beyond their control, such as job loss, death, injury, or disease. If the truth is that you gambled away your financial security in Vegas, on the horses, or in sports, no lender will feel even a smidgeon of regret in putting DENIED on your application.
To no one’s surprise, a proclivity for booze, drugs, or poor decisions will not help your case. The truth is usually a good thing. Certain truths should be kept silent if any of these vices are the source of your request.
No Resources And No Other Choices
Keep in mind this concept. If the lender believes there is any way for you to get money to either pay off the loan or resume monthly payments, don’t expect your short sale to be approved.
This may sound apparent, but unless you’re paying great attention to what you’re writing, it’s possible to miss anything. Perhaps you have a sibling who has a half-million dollars in his retirement account. Is it a good idea to reveal this information? No!
Lenders are swamped with short sale requests from desperate homeowners, especially in the aftermath of the Great Recession of 2008. They don’t have time to read War and Peace and are uninterested in hearing about your life.
It would be to your benefit to outline the hardship, explain how you’ve tried and failed to resolve it, and why a short sale is the only viable alternative. Nothing else piques their curiosity. Make sure your letter isn’t more than one page long.
Stay Away from Templates
You’re mistaken if you believe a lender who has read hundreds, if not thousands, of short sale letters won’t notice if you’re using a template. Your best chance for success is to be able to tell a compelling story about your particular situation.
Templates don’t cut it when it comes to being unique. Something else to think about. Try handwritten the letter in this print-obsessed computer age. It gives it a more personal touch.
Blaming the Lender is a Bad Idea
This may seem self-evident, but venting your rage and fury on the lender, stating their workers are idiots and the loan department is operated by bloodsucking moneylenders, will not help your cause.
While these assertions may be true, a short sale letter should not contain any accusations against the lender. Would you do someone a favor who had just insulted you?
Here’s the truth about presenting your hardship case. No lender in the world will allow a short sale if you are current on your mortgage payments. You’ll have to skip a few payments in order to be regarded seriously.
It’s a good idea to note in the letter that you’re one, two, or twenty payments behind and have no possibility of making up the difference.
The Bottom Line
The main thing to remember when writing a short sale hardship letter is that it will be read by a living, breathing human person at some point. When the lender comes down to consider a decision, the more genuine you come across in writing, the better.
The basic line is that you must demonstrate that approving a short sale makes more financial sense than allowing the property to fall into default. This should not be difficult in the event of a genuine emergency.