Short Sale: How hard does my hardship have to be?

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 may be approved.

Contact us today to see if you qualify for a Short Sale.

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