Short Sales: What's The Hardship?

Interesting.  Most of the callers I get about short sales do not have a hardship and want to sell because their home has lost value.  Of course, I don't go any farther with them.  No need.

Loss of job is a hardship, loss of equity is not. 

Medical and loss of income are probably second to it's become PC to default.

Medical and loss of income are nothing new traditionally they are the most common reason to default, and yes you can lose the house. They are true hardships.

Not wanting to make your payments, or owing more than the house is worth are a nuances not a hardships. Not being unable to sell quickly is just part of life not a hardship.

Wendy, this is a good post. Most people don't want to know the truth.

Bill

The majority of the short sales I have handled have been because the people are upside down in value not because they cannot make the payments. Here's the most recent and I kid you not: We want to move to Canada so we're just walking away. Oddly the very first one I ever handled, long before there was a real estate bubble? A couple got married and the new wife didn't want to live in the old wife's home. So they just went and bought a new house and let the old one go. Fortunately, back then, it was very easy to get a deficiency judgment and there was about 18% equity in that home back then. From speaking with others in my position it is very common today that people could actually make their payments or get a modification - they just choose to do nothing. That's here in the Atlanta area and I know real estate IS local even though the problems are fairly global.

Majority of the short sales in LA area is because of the ignorance to the Negative AM loans, and that when they do turn into a fixed rate how much higher the mortgage is going to be in our area.

I have a friend whos fiance is trying to sell short sale just because the house is worth 50K less and they are moving in together. Not sure how that will work. Not my listing.

The lack of a traditonal hardship reason is becoming more common down here.  Oddly, I know of at least one case where the sellers didn't have a hardship per se (they had taken out the equity of the 1st house to pay the 2nd house in Texas).  So, since they couldn't sell house #1 for what they had in it, they let it go to a 'short sale'.  I knew when all of these foreclosure & short sales started that the stigma of losing your home would end--and it has. 

AT least they are hardships. We have listing agents here putting listings in as shorts that have not yet contacted the bank and there is no hardship. Found one such just yesterday.

Wendy, most of my short sale Sellers have suffered losss of income also. Add to the loss of income: medical expenses from illnesses. I've had Sellers who have had the loss of their spouse who was the major household earner, job transfer and divorce.  I haven't run into fraud yet.

Your question is right on: Should some of these homeowners ever been approved in the first place for the loan?

It sure would be nice if sellers got an approval (or disapproval) of hardship from their lender before they put it on the market. Some listing prices are very unrealistic, and in some cases there is no way that the lender is going to approve a short sale at any price, since the sellers have ability to pay and/or assets to pay.

Hey Wendy - Wow nice spam comment above. She was at my blog and left the same message! What a fool.

Your numbers are about what I would have expected.