There are government and bank rules that are changing almost on an hourly basis, but here are the most common reason that banks are allowing homeowners to short sale their home:
Reasons you can short sale:
1. Lost your job
2. Had a death in your family
3. Going through a divorce
4. Mandatory job relocation
5. Medical Bills
6. Military bills
7. Payment increase or adjustment in your mortgage
8. Insurance or tax increase
9. Reduced income
10. Too much debt
11. Owe more than your home is worth