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Wednesday, February 9, 2011

SHORT SALES: HARDSHIP DEFINES THE NECESSITY AND OR PROVIDES AN AVENUE FOR SHORT SALE APPROVAL


WHAT ARE CONSIDERED TO BE LEGITIMATE QUALIFYING HARDSHIPS FOR APPROVABLE SHORT SALES:
    1.  Unemployment
    2. Divorce
    3. Medical emergency / sudden illness
    4. Bankruptcy
    5. Death

Basically, the Seller Has Fallen on Hard Times.
The seller must submit a letter of hardship that explains why the seller can not pay the difference due upon sale, including why the seller has or will stop making the monthly payments.
At the same time, here are few examples that do NOT constitute a hardship are:
    1. Bad purchase decisions. Blowing your paycheck on a home theater system with surround sound does not qualify as a hardship.
    2. Unhappy with the neighbors. Even if every home on your block has turned into pot growing houses, that will not qualify as a hardship.
    3. Buying another home. The lender will not care if you have decided the home is no longer suitable for you or your family.
    4. Pregnancy. Increasing the size of your family or starting a family is not considered a hardship.
    5. Moving into an apartment. If you decide to move out of your home, that is a lifestyle decision and not a very good reason to abandon your home.
Furthermore, the Seller Has to have no or not enough Assets to offset the deficiency between outstanding loan balances due and price home will fetch when sold.
The lender will probably want to see a copy of the seller's tax returns and / or a financial statement. If the lender discovers assets, the lender may not grant the short sale because the lender will feel that the seller has the ability to pay the shorted difference. Sellers with assets may still be granted a short sale but could be required to pay back the shortfall.
For example, if the seller has cash in a savings account, owns other real estate, stocks, bonds or even IRA accounts, the lender will most likely determine that the seller has assets. However, the lender might discount the amount the seller is required to pay back.

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