Am I eligible for a short sale?

While there is not a specific set of guidelines to determine whether you are eligible for a potential short sale of your home, below is a series of questions that may help when determining whether or not you might qualify:
  1. Are you experiencing a financial hardship?
  2. Are you behind or unable to make your mortgage loan payments?
  3. Is your loan an adjustable rate mortgage that is about to adjust so the payments increase significantly?
  4. Have you attempted a loan modification, refinance or HAFA program to find that you were ineligible or unable?
  5. Is your mortgage/loan balance more than your home value?
  6. Are you at risk of imminent default?  Meaning, your future income or assets are at risk due to economic conditions.
If you answered yes to any of these questions, you might qualify for a short sale transaction. Another way to determine if you may be eligible to short sell your home, is to reach out to your bank and ask them if you qualify

Potential Reasons for Hardship

Below is a nonexclusive list of potential 'verfiable' hardships. Please be advised that even if your hardship category is listed, the process is individualized. Approval for any particular hardship is never guaranteed. Other possible verifiable hardships may also exist.

There are numerous reasons that people experience hardship.  The following reasons have been outlined as potential "verifiable hardships":

  1. Loss of Employment – When an individual or family suffers a job loss, especially a primary wage earner, financial distress can occur very quickly and decisions have to be made with regard to payment of obligations.
  2. Reduced income – If a person is in a commissioned-based business (sales or commission based) and the economy suffers, often times their income suffers.  Also, many employers forfeit bonus income or pay increases during tough economic times thus reducing reliable income used to pay housing expenses.
  3. Business Failure – For business owners, the devastation of a business failure is often followed by the inability to pay the mortgage payments.
  4. Death – The death of a family member, regardless if they are a wage earner or not, can throw the family into emotional and financial devastation.
  5. Severe Illness – Severe illness or hospitalization and the medical bills associated with such illness compounded with time away from work can cause mortgage payments to default and the home into distress.
  6. Damage to Property – Many times insurance companies will not cover the full amount of damage to the property.  If the insurance does not cover and the homeowner cannot financially afford to pay the remaining repairs, then the property can easily fall into distress.
  7. Divorce – It goes without saying that divorce is one of the most common reasons for financial distress in the real estate market.
  8. Relocation – In this ever changing job market, homeowners do not always have control over where they live and relocation is a necessity, not a choice.  The relocation causes financial stress, as the budget will not carry maintaining two household living expenses.
  9. Military Service - Except for the relief provided in very specific situations by the Servicepersons Civil Relief Act (SCRA), military service can lead to unexpected financial issues.
  10. Adjustable Rate Mortgage (ARM) Increase – This is one of the largest reasons for mortgage default and forelcosure in today’s market.
  11. Insurance or Tax Increase – For many homeowners, the increase in taxes or insurance on an annual or monthly basis will cause financial distress.
  12. Separation – At times, job requirements may have one spouse in a different state and travel expenses and the expense of running two households can cause financial distress.
  13. Debt Overload:  The recent increase in interest rates on credit cards have caused some minimum payments to increase, causing financial distress.
  14. Incarceration (forced relo) – That says it all.
  15. Inheritance – Rarely does someone think of an inheritance as a means of distress.  However, heirs are left to pay unexpected mortgage bills, utilities, funeral bills and maintenance on the home.

Your Options


A good place to start is with some standard definitions of decision making.

  1. Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker. Making a decision implies that there are alternative choices to be considered, and in such a case, we want not only to identify as many of these alternatives as possible but to choose the one that best fits with our goals, desires, lifestyle, values, and so on.
  2. Decision making is the process of sufficiently reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made from among them. This definition stresses the information gathering function of decision making. It should be noted here that uncertainty is reduced rather than eliminated. Very few decisions are made with absolute certainty because complete knowledge about all the alternatives is seldom possible. Thus, every decision involves a certain amount of risk.

Determining your options while in a distressed state can be difficult, perplexing, and nerve-racking. “My Options” will give you a brief overview of all of your potential options that should be explored. This source provides useful and practical information to you when determining your options.  In this section, you will find:



Loan Modification


Loan Assumption

Short Sale

Deed-in-Lieu of Foreclosure

Strategic Default