Putting Together the Short Sale Package
Each Lender has its own requirements to include in a Short Sale package. Here are the most common things that Lenders require before they will begin to consider a Short Sale:
1.) A hardship letter from the homeowner outlining what is causing missed payments and what the homeowner has done to try to change the situation.
The letter should start with a brief identification of the property, the loan number and a sincere apology for the situation.
Then the homeowner should tell in their own words exactly what caused the missed payments. Extensive medical bills? Job loss? Did the homeowner retire, cutting income substantially? Has an adjustable rate loan readjusted? Is the home underwater on its mortgage? Has the homeowner been transferred to another part of the country and the home is not selling? All of these are valid hardships that can be explained in a letter to the Lender's Loss Mitigation Department.
Also include a description of any efforts the homeowner has made to resolve the problem. Has a new job been found? Have they eliminated all discretionary spending?
2.) Two most recent pay stubs for each job held by all members of the family contributing to the household income. This includes pensions, regular draws from an annuity, commission income over the past two or three months, child support, alimony, etc..
3.) If the homeowner has a business, the Lender will want to see profit and loss statements and a current balance sheet.
4.) Last two months' bank statements. They tell a lot about spending habits. A homeowner also paying a lot of credit card debt might work with a debt counselor to negotiate with Lenders to forgive part of the payments, or restructure the loan with lower interest rates and lower payments.
5.) The last two years' tax returns. They give an accurate picture of financial stability and ability to pay. It also gives the Lender an idea of other resources that might be tapped if the Lender goes through with foreclosure and files a deficiency judgment against the homeowner.
6.) A realistic budget. If the budget comes out plus or minus $300 of even on the average month, it may be possible to restructure the budget so the homeowner can save the house if they prefer to do so.
7.) A listing agreement with a price. The real estate agent should include their normal commission and closing costs on the listing agreement. Lenders who approve Short Sales also pay for the commissions and most other closing costs.
8.) An offer. Your offer, as well as the power of attorney gives you the power to negotiate the Short Sale and list the property. You cannot do these deals without having both of these documents.
9.) Power of Attorney. You must have an authorization form giving you or your negotiator permission to talk to the Lender. This is actually the first document that you should obtain from the homeowner so that you can obtain any special instructions from the Lender before the Short Sale package is submitted.
Just collect these documents and you are well on your way to getting a short sale done!
1.) A hardship letter from the homeowner outlining what is causing missed payments and what the homeowner has done to try to change the situation.
The letter should start with a brief identification of the property, the loan number and a sincere apology for the situation.
Then the homeowner should tell in their own words exactly what caused the missed payments. Extensive medical bills? Job loss? Did the homeowner retire, cutting income substantially? Has an adjustable rate loan readjusted? Is the home underwater on its mortgage? Has the homeowner been transferred to another part of the country and the home is not selling? All of these are valid hardships that can be explained in a letter to the Lender's Loss Mitigation Department.
Also include a description of any efforts the homeowner has made to resolve the problem. Has a new job been found? Have they eliminated all discretionary spending?
2.) Two most recent pay stubs for each job held by all members of the family contributing to the household income. This includes pensions, regular draws from an annuity, commission income over the past two or three months, child support, alimony, etc..
3.) If the homeowner has a business, the Lender will want to see profit and loss statements and a current balance sheet.
4.) Last two months' bank statements. They tell a lot about spending habits. A homeowner also paying a lot of credit card debt might work with a debt counselor to negotiate with Lenders to forgive part of the payments, or restructure the loan with lower interest rates and lower payments.
5.) The last two years' tax returns. They give an accurate picture of financial stability and ability to pay. It also gives the Lender an idea of other resources that might be tapped if the Lender goes through with foreclosure and files a deficiency judgment against the homeowner.
6.) A realistic budget. If the budget comes out plus or minus $300 of even on the average month, it may be possible to restructure the budget so the homeowner can save the house if they prefer to do so.
7.) A listing agreement with a price. The real estate agent should include their normal commission and closing costs on the listing agreement. Lenders who approve Short Sales also pay for the commissions and most other closing costs.
8.) An offer. Your offer, as well as the power of attorney gives you the power to negotiate the Short Sale and list the property. You cannot do these deals without having both of these documents.
9.) Power of Attorney. You must have an authorization form giving you or your negotiator permission to talk to the Lender. This is actually the first document that you should obtain from the homeowner so that you can obtain any special instructions from the Lender before the Short Sale package is submitted.
Just collect these documents and you are well on your way to getting a short sale done!
Source...