Monday, March 12, 2012

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 access 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, feel free to call or email us. We've successfully completed short sale transactions numerous times. You truly need a professional helping guide the way if you're considering a short sale.

If you'd like to read more about short sales, click this link for another blog post that's more in depth.

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