How to Write a Hardship Letter or Reason for Default

Your hardship letter is big part of the decision making process when the bank is deciding whether or not to allow you as the seller to short sale your property. It is the sellers chance to explain their story and why they feel the bank should take less money than they are owed. If possible the borrower should document their situation to prove to the lender you are not exaggerating your hardship. If you do not have a hardship the lender will usually not consider negotiating with you.

When you are writing your hardship letter try and follow a few guidelines.

  • Keep it short

    One page is probably sufficient to explain your situation. You want the mitigation department to actually read the letter. If you letter is nothing short of a novel no one will read your letter or your short sale package will be put at the bottom of the stack.

  • Keep it simple

    Get straight to the point and let them know your situation. Make it very easy for anyone to read. Short paragraphs, bullet points, any simple format will do. Don’t have the entire page as one paragraph.

  • Be very specific

    Write about exactly what happened or is happening to you. You will be more convincing if you can avoid generalities or vague descriptions.

  • Mention what you have done to remedy the problem

    Make sure you include what you have done to try and solve the problem. Any bank is going to want to know what efforts you have made to try and make good on your note.

  • Don’t exaggerate

    You may have to document everything that you say in your letter so be honest. Keep in mind the hardship letter and the short sale package are meant for the bank to determine if it is in the banks best interest to allow you to pay them less than they are owed.The quickest way to get the bank to not approve your short is to lie or fabricate anything on the letter.

  • Your short sale Realtor will help you write a letter and will review it before it is sent to the bank. There are also plenty of samples of hardship letters on Google if you search for them. This is an important part of the approval process, however you will have plenty of help.