According to a recent survey conducted by the California Association of Realtors®, short sales are getting a little bit less frustrating for agents, however they are still difficult to process. Lender policies and investor guidelines are constantly changing, and processing a short sale successfully often involves something like shooting at a moving target.
Over the last three months, I have had lots of short sale drama with respect to seller hardships. A short sale is more likely to be approved by the mortgage lender if there is a verifiable hardship. Those hardships include job loss, decrease in income, divorce, medical, death, and mortgage payment adjustment. There are other groups of folks that often need to sell with good reason, yet no hardship. One group that may need to sell are those that have had a military transfer or a job transfer to another area. Also, folks that need to downsize (empty nesters) or upsize (growing families) may also need to sell.
Depending upon your short sale lender and the investor that owns the mortgage, the reason for the short sale may play an important role in the bank’s decision as to whether to process the short sale. Be aware that many lenders may tell you that they will not review the short sale unless the seller is 60 days late on the mortgage. Others may tell you that the hardship in the hardship letter is not acceptable.
What to Include in the Hardship Letter
The best advice that you can provide to the short sale seller is this: write about what has changed since you purchased the home, and why you need to sell it right now.
The former English teacher in me can tell you that this letter should be around five sentences long.
- Start with an introductory sentence that states the loan number and the property address.
- Include one sentence about the seller’s situation when the home was purchased (no kids, three million dollars in the bank, etc.).
- Write one or two sentences about why and how the situation has changed and why the property must be sold right now.
- Add a concluding or closing sentence that thanks the lender and urges the bank to accept the short sale.
I cannot guarantee you that this letter will assure short sale approval. However, with the sheer volume of short sales that each bank employee touches on a daily basis, I’m fairly confident that a short and concise hardship letter results is much more efficient for short sale processing.