As part of working through a short sale with your mortgage company, they will require you to submit a “hardship letter”. This 1-2 page letter is simply an explanation of why you are having difficulty making the mortgage payments and are requesting a short sale. While the below list is not a complete or exhaustive list of reasons for short sale hardship, but it can give you some of the more common options that banks will accept:
- Loss of employment-This is probably the easiest to explain and the most common reason. With unemployment hovering around 10%, everyone is feeling the impact of being out of work. Unfortunately, the loss of income is most often felt by families immediately as very few have more than 30 days worth of emergency funds available.
- Mortgage Adjustment or Payment Increase-Most often this is caused by the homeowner having an adjustable rate mortgage (ARM). At set times during the life of this mortgage, the payments can increase significantly (sometimes as much as 50-100%). That dramatic increase is too much for the homeowner to shoulder and they begin to miss payments and head toward foreclosure.
- Reduced Income-If a person is in a commissioned-based business, they may be experiencing a lower than typical income, which is putting a strain on their ability to pay their mortgage. Alternatively, many corporate employees are being asked to take pay cuts to help the business. Others have lost their higher paying job and are taking any work they can find, even if it is substantially below the income they were previously making.
- Illness-A several illness and the medical bills that result can throw a family into financial hardship. These and even simple illnesses may impact the hours worked and income generated, resulting in missed payments and eventual foreclosure.
If you are experiencing any of these hardships, you may want to consider getting some short sale help.