This is a question I get asked allot these days. The short sale process is a hot topic and what works or does not work is a huge question. The reason it is so complex is because each servicer / bank have different rules and procedures. On the subject of hardship: each mortgage lender have a different set of excuses that they consider a hardship.
So when it comes hardship and what is considered an approved hardship - the and safest answer is "I don't know I will have to check your mortgage servicer/bank" because it is not up to your real estate agent to make that call.
Question: Is relocation to another job location a good hardship? Relocation can be a valid hardship with most banks, but you should verify it is with your bank. There is a rule that if your job takes you 100 miles from where you are living now, it is considered putting a hardship on you and it would probably be approved. (its not that hard to equal 100 miles travel (50 up and 50 back) and if your company is transferring you then it is a forced hardship - right? When you write your hardship letter you must be clear and document enough facts so that there is no guessing. Hardship sample
While this may be simple for some homeowners, others should ask their real estate agent to speak to their servicer and see what they say or if you would feel better let your personal legal adviser - advise you on this.
There is the Mortgage Debt Forgiveness Act of 2007 that is still in effect until December 31, 2013 that has helped thousands of homeowners from being taxed for the difference between what they owe and what they short sale their property for and some where able to use the relocation hardship to get an approved short sale - others were not.
For more information on how this works from the Federal side (IRS) check out. Reference IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, and contact your personal legal and/or tax adviser for details.