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Home Bank Approval for Short Sales

Short Sale Real Estate Approval


Phoenix Short Sale Approvals - What Do Banks Look For? 


When a bank is looking at whether to approve an Arizona short sale, they look closely at two things.


Demonstrable Financial Hardship


First, does the seller have a "demonstrable financial hardship." The seller will have to show proof of this hardship through financial records, employment documentation, as well as a signed letter that will all be submitted to the bank for review during the short sale process.   
So what is considered an Acceptable Financial Hardship? 


A financial hardship is:  A substantial change in a homeowners financial situation that will prohibit or affect their ability to pay their mortgage.  Below is a list of the most common financial hardships banks are currently seen in today's market:

  • Job Loss
  • Failure of a Business
  • Divorce
  • Severe Medical Illness
  • Forced Job Relocation
  • Death of a Family Member or Spouse
  • Inheritance
  • Unexpected Medical Bills
  • Extended Service in the Military
  • Mortgage Interest Rate Adjustments/Payment Increase
  • Income Reduction
  • Separation
  • Excessive Amount of Debt
  • Incarceration

Financial Resources 


The second item that a bank will look closely at is, the seller's ability to pay down the loan.  Does the seller have liquid cash or assets that they could use to buy-down their loan?  If they do, the bank will most likely expect the seller to use some or all of these funds to do just that.  A bank is only going to approve a short sale for a seller who can demonstrate that they are insolvent, meaning that they have a large amount of debt with no ability or resources to pay on that debt.  This only makes sense though, a short sale is not a way to just "get out" of a mortgage, it is a last resort tool that a homeowner can attempt when they truly can't pay their mortage.    


AZ Certified Distressed Property Specialist


Home Bank Approval for Short Sales