See below here are the basic qualifications for a short sale. Although there are a few exceptions this covers the broad base of what all the banks agree on.
1. Need to sell Meaning that this not just a want to sell, because of certain circumstances the homeowner needs to sell. In this situation no other work out options will work, causing the homeowner to have to sell the property. The homeowner may have lost equity and wants to sell, that does not mean they qualify for a short sale.
2. Hardship Here is something that a lot of people over look or have confusion on. As mentioned before different banks have different views as to how much they scrutinize the hardship, but overall here is how they view it: a. The homeowner had a material change that has taken place since they took out the loan b. Prevents them from paying. The bank is going to ask for all the homeowners financials to determine if they have a financial hardship, and if they do not see a legitimate hardship the may deny the request.
3. Don’t have the assets to pay off the mortgage. If a homeowner has significant assets from other sources this can also affect the short sale request. The bank may move forward with the short sale but may request the homeowner relinquish some of their assets to cover the short fall.
4. Must have or will soon have a financial short fall. This one pretty simple, more expenses going out than income going in, and again the bank will look at bank statements and paystubs to verify the information.
In the next post we will go over what banks consider expectable hardships.