Once you understand what a short sale is, the natural next question is the one Keith Jones tackles in this clip: why would a bank ever agree to take less than it’s owed? “Now that we’ve discussed what the definition of a short sale is,” Keith begins, “what are some of the reasons that the bank will grant a short sale? They’re called hardship reasons.” That word — hardship — is the heart of every short-sale approval, so let’s unpack it.
The two reasons a bank says yes
There are really two forces working in your favor. The first is economics. Foreclosure is slow and expensive for a lender: months of unpaid interest, attorney and court costs, property preservation, and then a steep discount when a bank-owned home finally sells at auction. A clean short sale often nets the bank more money, faster, with less risk. When a loss-mitigation officer reviews your file, the real question is simple: does this offer beat what we’d walk away with after foreclosing? If yes, the bank has a financial reason to approve.
The second force is your hardship — the documented reason you can no longer keep up the payments. Lenders don’t grant short sales to owners who could pay but would simply rather not. They grant them to owners who genuinely can’t. Proving that hardship is your job, and it’s where Keith spends most of the video.
What counts as a hardship
Keith lists the hardships lenders see most often. “Your hardship could be unemployment, death of the principal mortgagor, death of the spouse,” he says. He adds a category many people miss: military relocation. “VA could be getting orders to move — and VA does not require that they have to be past due during their mortgage, where most lenders require that there is a hardship and you showing that you are past due is part of that hardship.”
That distinction is important, so it’s worth restating. For most conventional lenders, being behind on payments is itself part of demonstrating hardship — the lateness is evidence that the hardship is real. For service members using VA programs after receiving Permanent Change of Station (PCS) orders, the rules can be more forgiving; you may not need to be past due to qualify. If you’re a veteran or active-duty homeowner, that’s a conversation worth having early.
Other hardships lenders commonly accept include:
- A significant income drop — reduced hours, a lost commission, or a failed business.
- Divorce or separation that makes one household income impossible to stretch over the mortgage.
- A medical event — illness, disability, or crushing medical bills.
- Mandatory relocation for a job, or an adjustable payment that jumped beyond reach.
The hardship letter is your case
Keith is direct about what ties it all together: the hardship letter. You have to “explain to the mortgage company, putting your hardship letter as the reason why you are doing a short sale and why the lender should grant you a short sale.” Think of this letter as the opening argument in your file. It’s a short, honest, specific account of what changed in your life, when it changed, and why the payment is no longer sustainable.
A strong hardship letter is concrete, not dramatic. It names the event (“I was laid off on March 3”), shows the impact (“my income fell from $X to $Y”), and states the ask (“I am requesting approval of a short sale”). It avoids exaggeration, because everything in it has to line up with the documents behind it.
Be ready with the documentation
Keith’s closing point is that talking to your lender is only the start — you have to be prepared to back the story up. Lenders verify hardship with paperwork, so assemble it before you apply. Expect to provide recent pay stubs, the last few months of bank statements, recent tax returns, and a financial worksheet of your monthly income and expenses, alongside the hardship letter and the buyer’s written offer. A complete, consistent package is what keeps a file moving; missing documents are the number-one reason short sales stall.
We walk through the full document checklist on our short sale help page, and you can see Keith cover the rest of the process in the short sale video guide. If you want to understand how the next stage — pricing and the bank’s appraisal — works, read how to process a short sale.
One hardship, but sometimes two lenders
A wrinkle Keith’s hardship framework hints at is the number of liens on your home. If you have a second mortgage, a home-equity line, or any junior lien, every one of those lenders has to approve the short sale — not just the first. Each weighs the same question for its own position: is approving this sale better than what we’d recover in a foreclosure? A second lender that’s likely to be wiped out in foreclosure may still hold up an approval looking for a small payout, which is why files with two loans take longer and need careful negotiation. Flag any second lien to your agent at the very beginning so it can be worked early rather than discovered late.
Timing: hardship plus the foreclosure clock
Hardship gets you in the door, but timing keeps the door open. Because a bank’s review can run several weeks to a few months, you want to start the conversation the moment you know you’re underwater and falling behind — not after a foreclosure auction date is already set. The same hardship that qualifies you can become much harder to resolve through a short sale if there’s no runway left for the lender to review and approve the file. Early action is the cheapest advantage you have.
Where we fit in
The strongest short-sale files pair a well-documented hardship with a reliable, written offer the bank can compare against foreclosure. As a cash buyer across Northeast Florida, we provide exactly that kind of offer — no financing to fall through during the wait. If you’re behind and underwater, request a no-obligation cash offer or call or text 904-606-9163, and we’ll help you figure out whether a short sale is your best path.
This article is general information, not legal or tax advice. Consult a licensed Florida attorney, a CPA, or a free HUD-approved housing counselor at 800-569-4287 before deciding.