In a hardship letter for short sale (or short payoff), if a seller/borrower is currently not in default, but can make the case that it is unavoidable, they can proceed with a short sale according to Freddie Mac.
A Sample of Freddie Mac Eligibility Standards for Borrowers:
1. Meet residency and occupancy eligibility
2. Meet hardship requirements (death of borrower, divorce/separation, disability, distant employment transfer)
3. Deliquency on payments due to involuntary inability to pay, OR imminent danger of default
4. Complete Form 1126 - Borrower Financial Information
5. Allow access to the interior of the property for a Broker Price Opinion (BPO)
6. Property listed prior with a real estate broker at a price based on a market sales comparison using the as-is value with a 90-day marketing timeframe
7. Maximum possible contribution toward any deficiency from the sale in cash and/or a promissory note
8. The borrower did not enter into a program or arrangement where a third party takes the title and arranges a short sale in exchange for a fee.
9. Waive reimbursement of any Escrow, buydown funds, or prepaid items and assign any insurance proceeds to them, if applicable
10. The sale is an arm's length transaction
11. Have a monthly debt-to-income ratio greater than 55 percent
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Lisa Aguilera, The Aguilera Real Estate Team
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