Most lenders require the hardship letter for short sale approval. The homeowner should take this valuable opportunity to appeal to the lender(s) that the homeowner's situation is genuinely distressing and the lender(s) would be better off accepting the lesser amount in a short sale than to pursue a foreclosure. In the hardship letter, present the facts clearly and honestly. A well-written hardship letter will be able to explain the situation that caused you to fall behind and provide proofs of hardship. Situations such as divorce/separation, job loss or reduction of income, adjustment in mortgage payment, prolonged illness, or a death in the family are all acceptable hardships. While the letter should clearly explain the situation, it should also not be excessively lengthy.

Here are some guidelines to help when writing a hardship letter:

• Get personal; you should not feel embarrassed about the situation. This is your opportunity to state your case.
• A handwritten letter is recommended.
• Apologize that the lender is facing a loss.
• Include details regarding the hardship. Detail your current and past hardships (for example, job loss, car accident, medical problems either personally or in your immediate family, etc.) and include specifics for each hardship.
• Be sure to convey the steps taken to remedy the situation (borrowed money from relatives, used credit cards, borrowed from retirement accounts, exhausted savings, etc.)
• Note that you have exhausted all available options and a short sale is the only remaining option prior to foreclosure
• Bankruptcy could be addressed in the letter: "I don't want to have to file for bankruptcy."
• Any signed exemptions of documents should be included with the letter. This includes such items as a layoff notice, letter from employer noting reduction in pay/hours, non-payment letters for other bills, any delinquency notices from other creditors or service providers, doctor's notes regarding injury or illness, divorce papers, etc.
• If you do not have current bank statements, pay stubs or tax returns, you will need to explain in greater detail as to why those documents cannot be provided. For example: "I do not have pay stubs because I've been unemployed for 6 months and unable to find work." If you do not have tax returns, the lender(s) will want Extension Filings. If you do not have these to provide, ex-plain why (i.e., "I haven't worked in over 2 years so I haven't filed taxes or extensions.").