Do you have to have a hardship to do a short sale? Yes. What defines a hardship? Most commonly unemployment, underemployment, income reduction, divorce, death of a borrower, long term disability or serious illness, natural disaster, distant employment transfer, or business failure. These hardships are straight off the Uniform Borrower’s Assistance Form used by Fannie Mae and Freddie Mac. Are these the only hardships? No. I think the key is has there been something that has changed from the time you purchased the home to today and your ability to explain why you can’t keep your home. When looking at the Uniform Borrower’s Assistance Form you will see that each of these hardships has corresponding additional documentation that might be required to prove your hardship.
The hardship letter is an important piece of your short sale package. Keep in mind that many short sale negotiators have a stack of files on their desk. If you keep it short and to the point there is a better chance your entire letter might get read by the negotiator.
Here is the format I would recommend:
- State the loan number and property address.
- Explain the personal and/or financial situation you were in when you got the loan.
- Explain what has changed and the reason you now need to sell your home.
- Note that your home is now currently worth less than the amount owed.
- Request that you be considered for a short sale.
All borrowers will need to sign and date the letter. Throughout the short sale process your agent may ask you to update the letter as most lien holders will require the letter to be dated within the last 90 days.
Considering a short sale? Contact me today for more information.