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.