What is considered a financial hardship?


Financial hardship is where the homeowner can prove that their economic circumstance has changed since they originally qualified to get the mortgage.   Change in economic circumstances for the worse can result from any of the following situations:
  • Caring for sick family member – medical bills
  • Medical problem – medical bills
  • Loss of job – proof of unemployment, termination letter, etc.
  • Death in the family – death certificate
  • Divorce – divorce papers
  • Relocation – lease of new residence in other city and job-related paperwork
  • Maintenance and repairs making the house unlivable – photos of house with contractor’s estimates
  • Natural disaster of fire damage – insurance claim or photos of house
 
There may be situations that may be omitted from the above list.  When a lender is considering a short sale package, any financial hardship must be supported by documentation including but not limited to a financial worksheet, tax returns, and pay stubs.
 
What is NOT considered as financial hardship is:
  • Upset that the value of the home is below what is owed – the bank doesn’t care if the value dropped, only if you can no longer afford to make the mortgage payment.
  • Bad purchase decisions – going on a shopping spree and spending unwisely.
  • Pregnancy – if the size of the home is too small for a growing family.
  • Unhappy with the neighbors – if there are disruptive, noisy neighbors, the lender is not going to care that you can’t sleep at night because of police sirens and loud parties.
  • Don’t like the house anymore – the lender will not care that you’d like to move to another place because your tastes have changed.
  • Wrong school district – just because you want to live in another neighborhood with public schools, your lender will not look upon this as a hardship.
  • Too far to commute – even if you got a new job which is further away, your lender won’t care that you have to drive an additional 40 minutes because you took a new job.
 
When documenting hardship, there needs to be a legitimate hardship situation, not one of inconvenience.  If you have any questions about this, please contact us.