Do I qualify for a short sale? [Real NEastate]

Columnist Stacey McCarthy is off this week and will return next week. The installment below was originally published in June 2012.

Q: My hours have been cut on my job and I can’t really afford such a high mortgage anymore. I think I need to sell my house in Bells Corner, but I bought it in 2008 and I still owe more than it’s worth now. I prefer not to wreck my credit, so I am planning on doing a short sale, but I’m not sure if the bank will cooperate since I didn’t really lose my job. Under what conditions does a bank allow a short sale?

A: All mortgage lenders will have their own lender-specific conditions. For many mortgage lenders, reasons necessitating a short sale would not only include job loss, but also a decrease in hours or a decrease in wages. Some other reasons lenders might accept a short sale could be: divorce, military deployment, serious illness, death and incarceration.

Since your hours have been cut, it sounds like you have a legitimate hardship that a mortgage lender would likely consider while reviewing a short sale request, but it really depends on your lender’s conditions. Loss of income is certainly a legitimate hardship, but that’s not the only reason or qualification your lender may consider while deciding the fate of a short sale.

Some lenders put stock in a hardship, but others may take a hard line on other qualifications, like how much money you have in the bank, and what other debt they’re willing (or not) to pay in association with the short sale. Not all short sales are approved based on hardship alone. Your hardship may only be a part of the equation. Call your lender and ask for a list of short sale requirements.

Another good resource for you to check out is the Home Affordable Modification Program.

Good Luck!

Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.