Hardship - What Qualifies to be Eligible for a Short Sale?

I want to do a short sale and the bank says I need to display a hardship.  What counts as a hardship?

A hardship is a situation that renders a borrower unable to continue making monthly mortgage payments and/or unable to sell their property and cover the entire mortgage balance.

What are Legitimate Hardships?

Legitimate hardships include:

- The death of a breadwinner.

- Serious illness of a breadwinner.

- Serious illness of a family member, whereby the income earner(s) in a family take time off work to        care for the person.

- Serious damage to or a material defect with the property that will not be covered by insurance.

- Loss of a job.

- Reduced hours at work, which lowers a person’s take-home pay.

- Loss of a job by one of the two people in a dual-income household.

- A forced job relocation, typically more than 100 miles away.

- A divorce, typically one that involves a sharp decline in income and/or significant reduction in liquid assets.

What Situations Do Not Qualify as Hardships?

Situations that are not hardships include:

- Desire not to pay, even though the borrower has substantial income or assets.

- Decline in property values (in some areas of the country, like California, Arizona, Florida, and Nevada, the decline is so sharp that it may qualify as a hardship).

- A break-up between a boyfriend and girlfriend who were both on the mortgage.

- A person who has substantial liquid assets and who therefore could easily pay the difference that is owed.

- Depression experienced by the borrower.

- A person who is angry at the bank and wants to stop paying to make a point.

If there is no hardship, then it is extremely unlikely that a short sale will be approved.

If you believe you are a candidate for a Short Sale, contact me to discuss how we can help you get through this difficult time and avoid foreclosure.

Reprinted from the website “Significa Short Sale Solutions” with permission.