Mark & Kristin Stampini

I have provided a sample copy that I use that has been very successful in helping to get short sale packages accepted. It is not the only piece of the puzzle, but it turns out being a very big piece as we have found through our experience. I have tested numerous versions and this one works best. It was carefully crafted to provide the borrower with the most leverage and express to the bank that if the short sale is not approved, the borrower may seek the relief from the Bankruptcy courts. 

Whether you have contemplated filing for bankruptcy or not, the implied threat of putting the property into a personal bankruptcy will get the attention of the bank. The absolute worst case scenario for any bank is to spend money going through a foreclosure action against a borrower in default and getting a couple of days away from the property being sold on the courthouse steps and then having the borrower file for bankruptcy and bring everything the bank has done up to that point to a screeching halt. A borrower filing a bankruptcy and including their property in that bankruptcy is the last thing that the bank wants to see.  

Without getting into all the legal aspects, the bankruptcy action stalls the foreclosure but does not stop the expenses on the bank side. The attorney fees continue because the case is still open and the holding and carrying costs continue, especially if the property owner has let the insurance lapse or is not paying real estate taxes. If the property is located where there is a Home Owners Association (HOA) then you can bet there will be additional costs accruing for monthly or quarterly HOA fees. Can you see why the banks would hate for this to happen and how it would continue to cost them money to keep this property on their books? You really are doing them a tremendous service by helping them unload this property.  

___Business failure ___Illness ___Military service

___Death of spouse ___Incarceration ___Reduced income

___Disability ___Job relocation ___Too much debt

Example of a Hardship Letter for an Investment Property

Attention: Loss Mitigation

P.O. Box 10388

Des Moines, IA 50306-0388

From: (Clients Name)

(Clients full address or P.O. Box)

Re: Loan # (***********), 1000 Main Street, Any town USA 99999 

To Whom It May Concern: 

Please accept this letter as my request for (Mortgage Company Name) or their representatives to work with the buyers that (You or your Company Name) may be working with to sell my property in (Whatever town/city the property is located in).  

We had purchased this property as an investment property, but with the falling values in and around our property, we are unable to sell it at a price to cover both our first and second mortgages. We are asking that you work with the buyers and accept a short sale payoff for our loan on this property.

I am seriously trying to avoid having to file a bankruptcy to avoid any further damage to my credit and would appreciate you working with these people to work out a short sale payment arrangement.

Since our financial position is unlikely to change within the next year or so, I am asking that you work with us to avoid a full foreclosure.  

Sincerely, 

Your Signature 

Your Name Printed:

Date: 

Important Note: (everyone who is on the mortgage needs to sign the hardship letter)

 Example Hardship Letter