How to Write a Hardship Letter

How to Write a Hardship Letter

Posted by Brandi Hammon on Tuesday, March 13th, 2012 at 8:36am.

Hardship Letter is One of the Most Important Documents in Loan Modification and Short Sale Processing

Borrowers who are considering a short sale of their property or doing a loan modification must be prepared to provide the lender with a hardship letter. This letter describes the financial distress which the Borrower is undergoing. Along with the financial information such as tax returns, personal financial statements, cash flow worksheets, etc., the hardship letter paints a very good picture of the Borrower's situation that the tax returns and other hard numbers may not convey.

A hardship letter should not be longer than one page. It can be, but it is better to present your case clearly and concisely in three to four paragraphs at the most. Make certain the letter is always dated and signed by all the Borrowers on the loan  

What is hardship?

First, to state, decreased value of your house and consequently a loss of equity is not an example of hardship. Being so-called "upside down" on your home does not constitute a hardship. The home being worth less than is owed is the reason to request a short sale so you may sell your home because of the hardship. The reasons a Borrower experience a hardship are usually very simple: unemployment, curtailment of income, increase in medical bills, death of a contributing family member, divorce, medical conditions and relocation. In the hardship letter go into moderate detail of the hardship, you may be experience more than one so please elaborate on both.

The Borrower should be prepared to provide the lender with the supporting information for the hardship. If the hardship is caused by unemployment, the bank may ask for proof of unemployment income receipts. The Bank can ask for a proof of medical bills, evidence of loss of income, divorce decree, etc.

A hardship letter should be well written as it is the main depiction of one's financial situation. It describes the reasons for the loan delinquency. Hardship is an event that recently occurred and is best described in writing as the figures and numbers on financial statements may not show it well. It should also explain anything that will show on taxes, bank statements, etc. An example may be a large deposit that came from a retirement account to keep your bills paid or if last year's taxes showed substantial income but now you are unemployed, etc.

If you need samples of a hardship letter or have questions regarding writing or editing one, feel free to contact Mountain Real Estate Companies. Email us at or call us at 801.745.8400.  

Our company has a dedicated staff to complete short sales with minimal credit damage and a full settlement of deficiency. Foreclosure is avoidable, let us help you.

By Brandi Hammon

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