What a short sale hardship letter and lender package generally include

What a hardship letter is for

A hardship letter is a short, factual statement explaining what changed in your financial circumstances — for example, a job loss, medical event, divorce, or other significant change — and how that change affects your ability to continue paying the mortgage as originally agreed. Servicers use it, along with your financial documents, to understand the request for a short payoff.

General elements sellers are often asked to cover

• A brief description of the hardship and approximately when it began.
• How the hardship has affected income, expenses, or both.
• Whether the hardship is ongoing or has already been resolved.
• A simple statement of the request — approval of a sale for less than the full payoff.

Keep the letter factual and concise. Avoid speculation about the property's value or the lender's decision-making; that is generally addressed elsewhere in the package through a valuation and the purchase contract.

Documents commonly requested alongside the letter

Every servicer's list is different, and mortgage investors or insurers may add requirements. Common categories include:

• Recent income documentation, such as pay stubs, benefit statements, or profit-and-loss records.
• Recent bank statements for accounts used to pay household expenses.
• Recent federal tax returns, when requested.
• A servicer-provided financial worksheet listing income, expenses, assets, and debts.
• The signed purchase contract and any addenda once a buyer is under contract.
• A preliminary closing or settlement statement showing anticipated proceeds and costs.
• Authorization forms allowing the servicer to discuss the loan with your agent or attorney.

A general submission checklist

1. Confirm the servicer's exact document list in writing before assembling the package.
2. Write a factual, dated hardship letter that matches the documentation you are providing.
3. Gather income, bank, and tax documents for the specific months the servicer requests.
4. Complete any required financial worksheet fully — incomplete forms are a common cause of delay.
5. Attach the signed purchase contract and any required addenda once you have a buyer.
6. Keep copies of everything submitted, and note the date and method of submission.
7. Follow up regularly and be ready to resend documents that age out during a long review.

Common mistakes worth avoiding

Submitting inconsistent numbers between the hardship letter, the financial worksheet, and bank statements can slow a review or raise questions. Leaving fields blank on servicer forms, rather than writing "not applicable," is another common source of delay. Finally, assuming a hardship letter alone will move a file forward without the supporting documents is a frequent misunderstanding — servicers generally need the full package before beginning a substantive review.

How this fits into the broader timeline

The hardship package is typically assembled early in the process, often alongside listing the property. See our short sale timeline guide for how this step fits into the overall process, and the short sales hub for a wider overview. If a foreclosure case is also active, review the foreclosure hub and confirm any deadlines with an attorney, since document preparation does not pause a court timeline.