See below here are the basic qualifications for a short sale, I hear the question all the time " how exactly do I qualify for a short sale" Although there are a few exceptions this covers the broad base of what all the banks agree on. There are some "grey" areas but this is a basic over view.
1. Need to sell : Meaning that this not just a want to sell, because of certain circumstances the homeowner needs to sell(usually caused by some type of financial hardship)In this situation no other work out options will alleviate the hardship, 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 a consumer's particular hardship, but overall here is how they view it: a. The homeowner had a material financial change that has taken place since they took out the loan b. This change in turn prevents them having the ability to pay the mortgage. 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 or ask for a promissory note/cash contribution.
3. They have a hardship and 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, if a homeowner has asset's to cover the short fall or mortgage balance, this could affect the outcome of the short sale approval. The bank is going to look at all the seller's financials, and if they have significant asset's this could affect the short sale.
4. The Seller 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 pay stubs to verify the information.If the seller has a surplus of income on a monthly basis in some cases the short sale may be denied. In other cases they may ask for a cash contribution or promissory note because they fell the seller has expendable income.
for more information on short sales check out my website at www.moorebrittingham.com or my blog at www.easternshorehomesolutions.blogspot.com
In the next post we will go over what banks consider exceptable hardships