Short Sale
If a homeowner is facing foreclosure, a short sale may be a better option. No, the homeowner still won’t be able to keep the home, but yes, it won’t damage the homeowner’s credit rating as much as a foreclosure will.
Below is a list of documents for the “short sale package” that will be submitted
to the lender for approval of a short sale.
(Note: These are general requirements and individual lenders
may require additional documentation to process the short sale.)
Short Sale Proposal Letter
The proposal letter should be clear and concise. It should not be more than one page and include an overview of the homeowner’s situation, what they owe on the home, and what the property is worth.
The letter should also identify the cost of needed repairs, if any, and what the offer to the bank is.
Short Sale Payoff Application
This application is provided by the lender. The homeowner should complete and sign the application.
Hardship Letter
The homeowner must provide a letter of hardship explaining the event or events that have
changed the homeowner’s ability to keep current with their mortgage payments.
Examples of hardship that lenders may consider include:
Business failure
Illness and medical costs
Divorce or death of a spouse
Natural disasters
Loss of equity is not considered a hardship!
Financial Information
The lender will want to see the homeowner’s assets and liabilities.
Assets may include:
Real estate
Stocks, bonds, mutual funds
Bank accounts
Personal property
Retirement accounts
Liabilities may include:
Real estate loans
Personal loans
Credit card debt
IRS liens
Judgments
Lawsuits
Lenders will also want to know the monthly expenses in addition to the assets and liabilities already mentioned.
These would include:
Credit card bills
Utility bills
Car payments
Insurance costs
Food and clothing
Medical bills
Child support
Tuition expenses
Supporting Financial Information
The following items are typically the same required by the lender when applying for a loan. The lender will determine how many months back (typically between 2-12 months) the homeowner needs to go in supplying this documentation.
Pay stubs
W-2’s and/ or tax returns
Bank statements and credit reports
Supporting Hardship Information
To provide the lender a more complete picture of the homeowner’s hardship, the following should also be included:
HOA liens
Medical bills
Disability statements
Unemployment benefits or status
Divorce decree
Comparative Market Analysis (CMA)
I will create a comparative market analysis using the most current comparable sales to submit to the lender. The lender will also order one or two broker price opinions (BPO), after they receive the short sale package.
Repair Estimates
Providing the lender with a detailed repair estimate from a reputable (licensed) contractor will assist greatly in getting the short sale accepted. The lender doesn’t want to own property. Especially not property that needs a major overhaul.
A short sale is a viable alternative to a foreclosure. As you can ascertain though, there is quite a lot of documentation and time involved with the short sale process. It is important to start the short sale process in the beginning phase of foreclosure to allow enough time for the short sale process. If a short sale is right for your situation, my team will help you put the short sale package together and work with your lender to expedite the process.
Please don’t hesitate to contact me today for a free, no obligations consultation to learn more about the short sale process and to see if it is the right option for you.
