Qualifying Hardships For Short Sales

Madeleine Jones
July 25, 2016

hand giving another hand a key, short saleDespite their best intentions, extenuating circumstances place homeowners in situations where they are unable to make their mortgage payments. Homeowners may use a short sale attorney to negotiate a short sale agreement and avoid foreclosure.

What Is A Short Sale

A short sale is any sale where the lender allows the homeowner to put the property on the market for less than the remaining value of the mortgage. The lender keeps all of the proceeds from the sale, and forgives the rest of the loan as a discharged debt.

In most cases, both parties are satisfied by the arrangement. The homeowner escapes an un-payable mortgage; the lender recoups money on the property without the hassle of foreclosure and an attempt to sell the property on their own.


Working with a short sale attorney, the homeowner must provide the lender evidence of an unforeseen hardship that has made honoring the original agreement impossible. Examples of acceptable hardships include:

  • Sharp decrease in home value: This reason was given frequently after the housing crisis in Las Vegas in 2007-2008. Homes were worth a fraction of the purchase price, and continuing to pay on the loan was a significant financial loss.
  • Unemployment: The sudden loss of a job or other source of primary income is one of the most common reasons to hire a short sale attorney. If the homeowner moves fast enough, they may be able to avoid some of the credit penalties associated with missing mortgage payments. The unemployment hardship can also be applied to homeowners who become ill and are unable to work for an extended period of time.
  • Relocation: Homeowners may be forced to relocate for their jobs only months into the mortgage, which leaves them upside down. A short sale is required, since the loan is more than the value of the home, even if the homeowner made every payment on time.
  • Divorce: One party in a divorce may not be able to afford a home on his or her own, leaving the couple with no other option but to sell the property. The only equitable way to settle the mortgage debt is to complete a short sale of the home.

A short sale is a viable way for homeowners to protect their future by avoiding a foreclosure. When done correctly, a buyer may be able to repurchase a home in as little as 18 months after the short sale.