Thursday, March 15, 2012

SHORT SALES: Short Sale Success: What is an Acceptable Hardship?

A short sale, in most instances, is a complex transaction. However, there are two very simplistic characteristics that every qualified short sale possesses:
  1. The house must be valued at less than the homeowner owes on their mortgage debt obligation. In other words, the home must be “underwater”.
  2. The homeowner must have a qualified hardship.
It is the second characteristic that we would like to touch upon in this blog post.
One question that we answer frequently is “My house is underwater. Is this an acceptable hardship?”  Unfortunately, the answer is always “No.”
The simple fact that a homeowners mortgage obligation is in excess of their house value is not an acceptable hardship. A Short Selling bank will entertain a short sale when and only when there is a hardship that will, now or in the future, affect the borrower’s ability to pay their mortgage.
The following is a list of acceptable hardships that may be used when submitting a short sale package:
  • Mortgage Rate Adjustments
  • Loss of Employment or Reduction in Wages
  • Business Failure
  • Medical Hardship
  • Death in the Family
  • Divorce/Separation
  • Military Service
  • Overwhelming Debt Obligations
  • Job Relocation
As always, should you have questions as to the acceptability of a hardship scenario, you
should seek advice from an expert that has been trained in the short sale field.

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