In order to sell a home in a short sale, the borrower generally must be able to show they are unable to pay their mortgage and currently are experiencing a financial hardship. An involuntary loss of income, a divorce which leaves one spouse in the home and unable to assume the mortgage payments, and injury or illness that results in the borrower being unable to keep up with payments are commonly given reasons for a financial hardship permitting a short sale.

Some lenders require that the borrower first attempt to do a loan modification before the lender will proceed with a short sale. Also, your lender will require you to submit various forms and other documentation to determine whether you and your property qualify for a short sale.

You may also qualify for a short sale under the Home Affordable Foreclosure Alternatives (HAFA) Program, sponsored by the U.S. government as part of the Making Home Affordable Program. Under HAFA, homeowners and lenders are given a financial incentive by the government to complete short sales of delinquent properties.

The program is specifically intended to help homeowners who do not qualify for a trial mortgage modification under the Making Home Affordable Program, did not successfully complete a trial loan modification period, or missed at least two payments in a row during the trial modification period.

It also may be available to homeowners who simply request a short sale under the program. You may even qualify to receive up to $3,000 to help out with relocation costs after you sell your house in a short sale under HAFA.

Contact your lender to find out if you qualify for a short sale under HAFA.

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