How do I write a short sale letter?

I have provided two sample short sale hardship letters for your reference. A short sale letter is used where (1) you have a buyer for your house, and (2) the selling price is below the amount you owe the lender.

If you don't have a buyer, use a Deed-in-Lieu of Foreclosure letter.Keep in mind your situation is unique. Therefore, you will have to make modifications to fit your individual situation.

Also, are you aware of the impact of foreclosure on your credit? I discuss foreclosure and your credit elsewhere on this site. It's important that you take action now to protect your credit score, or to repair it if its already damaged. You can check your credit score for free.

Sample Short Sale Letter #1

This letter is a request for your cooperation in a "short sale" of our home located at ___________________.

[Sample text regarding reason for request: My husband has been laid off from his job because of a work injury. He worked at Acme Manufacturers for twenty-five years. On June 15, 2006 a forklift ran over his foot and he has not been able to work since then. He receives $2,200 disability every month.]

I work at ______________ but only make ___________a month. Combined we both take home _________ which is not enough to cover our bills and the house payment.

The house is vacant. We are living with my elderly parents.

We have a real estate agent and she has found a buyer for the property with a purchase agreement offer of $__________(its current market value). This offer will not be enough to pay off our existing first and second loans on the property. It is a good offer and the buyer is anxious but I will need both the first and second existing lenders on the property to agree to cooperate in a short sale and therefore accept short payoffs.

Attached is my written authorization for you to speak with my real estate agent, ___________and my escrow officer, __________, at _____________Title Company about this matter. [Ask your real estate agent and escrow officer for their forms.]

I have enclosed a Borrower's Financial Statement and Explanation of Hardship Form for your consideration. [You should ask for these forms from the lender.]

Thank you for your prompt attention to this matter.

Sample Short Sale Letter #2

[Name and Address of your lender]

Attention: Loss Mitigation Department

Re: Loan _____________________

Dear Sir or Madam:

As you are aware, I have not made payments on the above-reference loan for the last ____months. I am providing this letter to explain my circumstances and to ask that you accept a short sale of my house.

My husband left me six months ago for another woman. At first, he sent money for me and our three children and helped out with the house payment. He works for the electric company and three months ago he tried to rescue a cat and touched a live line. Now he is on permanent disability and can’t send me any money. His girlfriend left him and he needs financial help from me. I work at the cosmetic counter at Nieman Marcus and the $3,500 I make each month barely covers our basic living expenses.

I put our house up for sale as soon as my husband stopped sending me money. It’s listed with ___________ Real Estate Company. My agent is _______________ and her phone number is __________________. I have enclosed an authorization allowing you to speak with her. [Note: your agent will be able to provide you with an authorization form.]

We listed the house for $250,000 which is what we owe you. In the last three months we have had one offer. Unfortunately, the buyer has only offered $210,000. I am asking you to forgive the $40,000 difference and to accept the $210,000 (less commissions and escrow expenses) as payment in full on the note. If you can do that I will be able to avoid foreclose and bankruptcy. My agent says she will accept a reduced commission if necessary to facilitate this deal.

Sincerely,

[homeowner]