The Short Sale "Hardship"
For many homeowners a short sale is the last option before foreclosure. When a bank is considering a short sale they aren't doing it just because the seller is upside down on their home. They are generally looking for a financial hardship to justify doing the short sale. The hardship letter and the financial package basically shows the bank there is no way you can continue to make the payments on your home. Your financial problems now becomes the banks problem if you can show you can't make the payments. What are some of the financial hardships a bank will accept?
Loss of job- Disability to prevent a seller from working
- Had to take a job for less money
- Relocation for work
- Illness
- Divorce
- Incarceration
- Failed business
- Increased Mortgage payment due to ARM adjustment, balloon payment etc.....
There can be other reasons for a hardship that aren't listed here but this list represents some of the more common hardships to have a short sale considered.
When stating the hardship you need to support your inability to pay with a financial statement as well as documents supporting your hardship such as divorce decree, hospital records and so on.....When it comes time to write your hardship letter to the bank, it needs to be less than one page and simply stated. Do not make your hardship letter overly complicated but do state the facts in detail. Any one of the reasons above is enough for the bank to consider a short sale.
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Why a Sort Sale?
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