A short sale hardship letter is a signed, factual explanation to your lender of what changed in your finances, why you cannot keep paying and why a sale for less than you owe is the realistic option. It should match your documents exactly: Fannie Mae, for one, requires hardship and income documentation with income papers no more than 90 days old. Never overstate a hardship; in Utah, fraud in a short sale removes the three-month deficiency protection in Utah Code 78B-2-313.
At a glance
| Fannie Mae income documents | No more than 90 days old |
|---|---|
| FHA Standard Pre-Foreclosure Sale | Hardship indicated, not verified (ML 2025-12) |
| Utah short sale deficiency deadline | 3 months after reconveyance; not if fraud (Utah Code 78B-2-313) |
What is a short sale hardship letter?
A hardship letter is a short, signed statement to your lender explaining what changed in your finances, why you cannot keep paying the mortgage and why you are asking for a short sale. It goes in the lender package with your application, income documents and the buyer's offer. The full package and the order things happen in are on the short sale process and lender package.
The letter supports your documents; it does not replace them. Fannie Mae, for example, treats a short sale package as complete only when its Mortgage Assistance Application (Form 710) is filled in and accompanied by income documentation and hardship documentation based on the type of hardship. Freddie Mac requires an eligible hardship for a standard short sale outside its streamlined path.
Do you always need a hardship letter?
Not always. Requirements depend on who owns or insures the loan, so ask your servicer what it wants in writing.
- FHA: the Standard Pre-Foreclosure Sale needs the borrower to indicate a financial hardship but does not require verification of it (HUD Mortgagee Letter 2025-12). See FHA short sale requirements.
- Fannie Mae: borrowers 90 days to 18 months behind with a FICO score of 620 or below, on a home that is not an investment property, can use a streamlined path without a full application; those more than 18 months behind always skip it.
- VA: if the loan is 60 or more days delinquent and the borrower asks for a short sale, the servicer does not need to evaluate the borrower's finances.
What qualifies as a hardship for a mortgage?
A hardship is a change you did not plan for that makes the payment unaffordable now and for the foreseeable future. Lenders commonly recognize:
- Job loss or a cut in income or hours
- Medical bills, illness or disability
- Divorce or separation
- Death of a borrower or a wage earner in the household
- A job transfer or relocation for work
- A large, lasting increase in expenses, such as a payment reset or a rise in taxes or insurance
Each investor sets its own list and the documents that prove each category, so match your letter to what the servicer's form asks for. Wanting to move or owing more than the home is worth is not, on its own, a hardship to most lenders. If your home is worth less than you owe but you can pay, options for an underwater mortgage covers the alternatives.
What should a hardship letter say?
Use plain language and your own facts. A structure that covers what a loss mitigation reviewer looks for:
Loan and contact details
Your name, the property address, the loan number and the servicer's name at the top, plus the best phone number and email to reach you. Date and sign the letter, and have every borrower on the loan sign.
What happened and when
Name the hardship category and the date it started, in a sentence or two. Dates should match your documents, such as a termination letter, a medical bill or a divorce decree.
How it changed your income and expenses
Give the before-and-after numbers: monthly income then and now, the mortgage payment, and the main costs that changed. These should agree with the figures on the lender's application form.
What you have tried
List the steps you have already taken, such as cutting expenses, using savings, applying for a modification or looking for work. This shows why keeping the home is not realistic.
Why a short sale and the request
Explain that the home is worth less than you owe and that a sale at market value is the best way to repay as much as possible. Then ask directly for approval and, if it applies, release of the remaining balance.
Documents enclosed
List what you are attaching so the reviewer can match each claim to proof. Fannie Mae requires standard income documentation to be no more than 90 days old, so dated documents may need replacing if the sale takes longer.
Keep the letter accurate
Never overstate a hardship, leave out income or change dates to make a case look stronger. Fannie Mae has servicers verify stated assets and reconcile inconsistencies, so a mismatch slows the file at best.
Accuracy also matters under Utah law. Utah Code 78B-2-313 bars a lender's lawsuit to collect the shortfall after a short sale of a single-family home unless filed within three months after the release or reconveyance is recorded, but that three-month bar does not apply if the owner committed fraud in the short sale. A truthful letter keeps that protection in place.
Tone and privacy
Keep the tone factual rather than emotional, skip blame, and leave out details unrelated to money. You do not need to share medical details beyond what the documents require.
Example: showing the numbers on a Herriman home
This is an illustration of the numbers section, not a sample story. Zillow's typical home value for Herriman was $601,499 in August 2026. A borrower who owes $640,000 could state in the letter that the home's estimated value is about $601,499, that selling costs come out of that price, and that the sale cannot cover the payoff. The lender's own BPO or appraisal decides the final figure. For a city-level picture of values and costs, see Herriman home values.
What happens after you send the letter
The servicer reviews the complete package with the buyer's offer and its valuation, then approves, counters or declines. If the hardship might be temporary, the servicer may first offer to keep you in the home with a modification or forbearance, which ways to stop foreclosure in Utah compares. Owners still choosing between a short sale and a cash buyer can compare them on how to sell a Herriman home when you owe more than it is worth, and the basics of the sale itself are on what a short sale is.
Do not pay anyone up front to write a hardship letter or negotiate with your servicer. A HUD-approved housing counselor, found through the CFPB's counselor search, can review your letter and package without charge. If your approval letter includes any agreement to pay part of the balance, have a Utah attorney read it before you sign, and ask a CPA about tax on forgiven debt.
Frequently asked questions
What qualifies as a hardship for a mortgage?
An unplanned change that makes the payment unaffordable, such as job loss or reduced income, medical bills, illness or disability, divorce, the death of a borrower, or a work relocation. Each loan investor sets its own list and the documents that prove each type. Ask your servicer which categories and documents it accepts for your loan.
What should a hardship letter say?
It should state your loan details, what happened and when, how your income and expenses changed, what you have already tried, and why a short sale is the realistic option. End with a direct request for approval and a list of enclosed documents. Keep it factual, consistent with your documents and signed by every borrower.
How long should a short sale hardship letter be?
Short enough for a reviewer to read in a few minutes. The lender cares about dates, numbers and documents, not length. If a detail does not explain the hardship or the money, it can usually come out. Attach proof rather than describing it at length in the letter.
Who benefits from a short sale?
The lender usually recovers more than it would through foreclosure, with less time and cost. The seller avoids a trustee sale and may get the remaining balance waived, and in Utah a short sale of a single-family home is covered by a three-month deficiency deadline. The buyer gets a home priced to the lender's valuation.
Who loses money in a short sale?
The lender or loan investor accepts less than it is owed. A second lender usually takes a small capped payment; Fannie Mae and Freddie Mac limit it to $6,000 in total. The seller loses any equity and down payment. Whether the seller still owes the rest depends on the approval terms and Utah's three-month rule.
How do you put an offer on a short sale?
A buyer makes a normal written offer with a short sale addendum or contingency that makes the deal subject to the seller's lender approving it. The seller signs, and the listing agent sends the offer to the lender with the seller's package. The buyer then waits for approval or a counteroffer. The buying a short sale page covers each step.
Sources
- Fannie Mae Servicing Guide: D2-2-05, Receiving a Borrower Response Package
- Fannie Mae Servicing Guide: D2-3.3-01, Fannie Mae Short Sale
- Freddie Mac Seller/Servicer Guide: Section 9208.1
- Freddie Mac Seller/Servicer Guide: Section 9208.2
- HUD: Mortgagee Letter 2025-12
- VA: VA Servicer Handbook M26-4 Chapter 5 (draft)
- Utah Legislature: Utah Code 78B-2-313
- Zillow Research: Home Value Index (Herriman city)
- CFPB: Find a housing counselor
- CFPB: What is a short sale?