More than any other document the hardship letter can help make or break a short sale. While banks care most about dollars and cents, it is important to remember that the package will be reviewed by an individual loss mitigator. Like the rest of us, this loss mitigator is a real person with real emotions who cannot help but be influenced by a sincere story of hardship.

You, the homeowner, need to create a compelling letter that is both accurate and moving. While you may be distressed and very sensitive about the situation and it may be embarrassing to you, you will find that if you proceed delicately and make your intentions clear, that they will be very open to give you help. To be clear more than anything else your hardship letter is the piece of "evidence" that can make or break the short sale deal, and therefore be the difference to the lender between a fresh start and credit shambles.

The short sale hardship letter can be typed or handwritten, but we have found that handwritten is most effective. It should contain some standard elements at the top of the letter including the name of the borrower(s), the date, the lender and the loan number. The end of the document should have the borrower's signature with the date, as well as the signature of any co-borrower. The length is not important so make it as long as needed to have the desired impact.

Tell the homeowner that the short sale hardship letter should contain no excuses, no complaints about the lender and no finger pointing. This is a time to be bluntly honest and ask for forgiveness (without begging). We suggest you open the letter with a declaration of your situation e.g. "I regret having to write this letter, but unfortunately due to our financial hardship we are no longer able to pay on our mortgage. We ask that based on our current inability to make payments that you consider working with us to find a better solution with a short sale."

The bulk of the hardship letter will tell the story of why you are unable to make payments to the lender. The letter should only include details that would influence the lender to have mercy on you and encourage them to work out a short sale. Do some brainstorming before writing the letter to determine the most import reason(s) for your hardship and that will motivate the bank to negotiate. Reasons such as illness or death in the family are best, while reasoning such as poor financial management is all but worthless. Keep in mind that the "drama is in the details" and that the hardship letter is more successful when the loss mitigator sheds a tear or two when reading it – but do stick to the truth.