A short sale is an agreement by which you sell your property for less than the outstanding balance on your mortgage. If your lender agrees to a short sale, it means that the difference between the two will be dismissed completely. Unsurprisingly, therefore, it is quite rare for lenders to agree with this proposal. One case in which they may consider it, however, is if you have experienced hardship due to a bad neighborhood.
Basics of Writing a Hardship Letter Short Sale Bad Neighborhood
A hardship letter is a piece of formal correspondence that will be on your permanent record with the lender. You must therefore treat it seriously. These letters are supposed to be short and to the point, including all the important information that supports your request for a short sale. The first thing to do, however, is make sure that you write it in the appropriate formal format, that it is addressed to the right individual, and that it is completely free from spelling and grammar mistakes.
Starting the Letter
Start the letter by explaining that you wish to sell the property, highlighting its address and when you purchased it. Indicate which mortgage company provided you with a loan on the property, the amount of the loan, the duration of the loan, and the type of interest rate. Make sure that you include documented evidence for all of that.
Content of the Hardship Letter
You should then go on to explain that the neighborhood in which you live has changed and has turned into a bad one. Provide dates of key events and highlight those specific events that caused the change. For instance, it is common for taxes to rise year on year (highlight the rates and dates) and that this has caused many people to relocate. Identify the results of the event, such as an increase in crime, drug use, graffiti, or squatters. Again, make sure to provide evidence.
The lender is not looking for a sob story, only for facts. However, you can indicate that you currently feel unsafe at your property, and that this has affected your children or your ability to live a normal, productive life. Both these issues can have an impact on your finances, something that you should again provide evidence for if such is the case.
You should then state that you have been offered a short sale for the property. Indicate the date, amount, and name of the prospective buyers. Explain that you put the property up for sale on a certain date, and that you believe the offer is the best one that you will be able to receive, since the situation in your neighborhood has been on the decline ever since. If there have been any foreclosures in the area, make sure that you include this information as well.
Ending Your Letter
End your letter by expressing your gratitude for your lender’s consideration and time. Explain that you are very sorry about the situation, but that you believe this to be the best solution for all parties involved. Make sure to sign and date the letter, include copies of all your evidence, and send it through registered post.
Hardship Letter Short Sale Bad Neighborhood Example
{Your Name}
{Your Address}
{Your Phone #}
{Your Loan #}
{Date}
To Whom It May Concern:
To Whom It May Concern:
I am writing to request the short sale of the house at {address}, which I bought on {date of purchase}. At the time, {mortgage company} provided me with a {30-year, 15-year, etc.} mortgage of {amount in dollars}, with a {fixed/variable} interest rate.
Ever since {event}, my area has become a bad neighborhood in which to own property. Taxes have increased from {rate} to {rate} per year, while the estimated value of my house has fallen from {value} on {date} to {current value}. As the neighborhood has gotten worse, my neighbors have been forced to relocate, which has led to {squatters/graffiti/drug use/crime}. I feel unsafe going out in my yard, and it has become a struggle just to pay the principal on my mortgage.
I am including the offer from the buyer I found on {date}. I put the house up for sale on {date} and I don’t foresee getting a higher offer than {amount}. Property values have been steadily declining since {approximate time} and show no signs of improving. There have already been {number} foreclosures on my block alone and the situation has become dire. I cannot meet these payments and I am steadily going bankrupt.
I would appreciate any help you can give me regarding these unfortunate circumstances. I have enclosed the relevant financial paperwork that will help to illustrate my current situation, including {explanation of the paperwork you’re including}. I would also appreciate it if we could work out a plan that doesn’t require you to make a negative report on my credit.
I hope that my plan for this short sale is amenable to you. Thank you for your understanding concerning my situation and the necessity of this modification.
Sincerely,
{Sender Name}