I have a seller with a similar story I am working with now and will be listing his home in a couple of weeks. I too, am not sure whether his lender is going to accept his hardship.
But, I wonder if you should address in your hardship letter the possibility of renting the property. In my seller's case I have addressed in the hardship letter that if he did rent the property it still would not be enough to cover the PITI.
I think it is good to cover all bases up front in the hardship letter. I would think that would be the first thing the negotiator would ask is....why not rent the property?
Follow up: I took this, the lender allowed the short sale and it was the fastest short sale transaction ever. I sold it in a week, the lender, MorEquity, was fabulously cooperative. We just closed on April 1st (haha) about a month after submitting the offer!!!!
I'm glad I took the risk! Everyone came out a winner - the sellers, the buyer, the bank and the agents.
Thanks for the advice everyone!!