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What is a legitimate hardship that the bank will accept?

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What is a legitimate hardship that the bank will accept?

asked July 23, 2011

5 Answers

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Job transfer or relocation may also be considered hardships. I have also experienced short sales where the homeowner was suffering from mental duress due to a recent burglary and the bank approved the short sale.

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All hardships are hardships and are difficult times in our lives. Hardships simply need to be explained to the bank.

The most common examples of hardships are:

  1. Loss of income,
  2. Disability or medical reasons, or
  3. Divorce

The most important part is explaining your hardship in a letter of explanation to the bank, and including all supporting documents validating the hardship.

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Loss of income for any reason
Sickness in the family creating a hardship financially
change in familiar status creating a financial hardship
Divorce
Job Relocation
Retirement changing income

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Speaking from experience, we have yet to have a Short Sale declined by a Seller’s Lien Holder regardless of “legitimate” hardship. The key is being absolutely candid with regards to it’s either a Short Sale or it goes to Foreclosure. If the Borrower has assets the Lien Holders may request a contribution – however – even when such a request is declined by the Borrower the Lien Holders still approve the Short Sale if it’s in the Lien Holders best interest. The “Hardship” question is one of the “dirty little secrets that lenders don’t want you to know”.

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As has been stated above, all hardships are personal. But keep in mind that if you only have a single mortgage on your property, chances are the lender has no recourse against you for any deficiency. In such an instance, the importance of the “strength” of your hardship is greatly diminished.

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