Do You Qualify for a Short Sale?

 

For the past few years foreclosures reigned supreme in the real estate market. As a realtor, I had to get used to the bank’ additional paperwork and timetables for closing a foreclosure transaction. Every bank was different not to mention the paperwork on the government or HUD properties. But we all learned the system and got used to the new foreclosure normal.

Now we have another ‘new normal’ – short sales. As I said in a previous post, short sales are overtaking foreclosures in the real estate marketplace. Given all of the other options for the homeowner, a short sale can actually be a ‘win-win.’  How do you know if you qualify for a short sale? It all begins with the nature of the hardship.

Your lender will want to know why you can no longer make your mortgage payment. Here is where it gets interesting… the answer can not be:   1) my house is not worth what I paid for it, 2) I no longer like the neighborhood or  3) I just want something else.  I am not making light of a very serious situation but sometimes people want to use the short sale process to dump one home and move into another. That will not work.

An example of a real hardship is as follows:

  • Loss of a job
  • Job relocation
  • Reduction in income
  • Serious medical issues
  • Dramatic change in interest rate
  • Death of a family member
  • Divorce or separation

The lender will want to see proof of the hardship such as a divorce decree, death certificate, termination notice, medical bills, etc.  This will provide proof that you are in a very serious situation and that while you would like to continue to make your mortgage payments, you are no longer in a position to do so.  A defined hardship is the first step in researching your eligibilty for a short sale.

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