Hardship Letter Checklist
A loss-mitigation reviewer spends 60 to 90 seconds on the hardship letter before deciding whether to keep reading the package. This is what they're looking for — and what makes them stop.
The letter is the package's cover memo.
The hardship letter is the first document the lender's loss-mitigation reviewer reads. Everything else in the package — bank statements, tax returns, the offer — gets evaluated against what the letter establishes. A weak letter sets a skeptical tone for the entire review.
A strong letter is short, specific, and consistent with the financial documents that follow. It does one job: convince the reviewer that the hardship is real, ongoing, and best resolved by approving the short sale rather than letting the loan run into foreclosure.
What Every Letter Must Include
- Borrower names, property address, and loan number at the top
- Specific cause of hardship — not generic language
- Date the hardship began and whether it is ongoing
- Current monthly income vs. current monthly obligations
- What you've already tried (modification, forbearance, refinance)
- Clear statement that you cannot continue making payments
- Request for short sale approval as the proposed resolution
- Signed and dated by every borrower on the loan
Hardships Lenders Recognize
- Job loss or substantial reduction in income
- Divorce or legal separation
- Death of a borrower or primary income earner
- Serious illness or disability with medical expenses
- Mandatory job relocation more than 50 miles away
- Adjustable-rate reset that materially increased the payment
- Business failure for self-employed borrowers
- Military deployment or service-related hardship
A one-page template that works.
Adapt the placeholders to your situation. Keep it on one page. Use plain language — no legal jargon, no emotional appeals beyond a factual description of what changed.
What goes in the package with the letter.
The letter establishes the narrative. The supporting documents prove it. Every figure cited in the letter should be traceable to something in the package.
Two months of pay stubs, or termination letter and unemployment benefits statement if not currently employed.
Two full months for every account — checking, savings, money market — with all pages, including blanks.
Two most recent years, federal, with all schedules and W-2s or 1099s attached.
Year-to-date P&L if self-employed, signed and dated, with prior-year comparison.
Itemized expenses showing the monthly deficit. The deficit is what makes the hardship credible.
Medical bills, divorce filings, death certificate, relocation orders — whatever documents the cause.
Phrases and patterns that get letters rejected.
- —Generic phrases like 'I fell on hard times' without specifics
- —Blaming the lender or the loan terms
- —Threatening foreclosure or strategic default
- —Listing luxuries — vacations, second homes, recent large purchases
- —Inconsistencies between the letter and the financial documents
- —Letters longer than one page — reviewers stop reading
California Short Sale Primer
How CCP §580e anti-deficiency protection, lender review, and 1099 forgiveness fit together — the framework the hardship letter lives inside.
Need help drafting your hardship letter?
We help sellers structure the letter and assemble the package every week. A 30-minute call usually produces a draft your lender will accept on first review.