A
short sale MUST be accepted by your current lender or servicer in order to proceed with the sale of your home. It is considered a privilege and not a right. So, with that said, one must be prepared to provide proof and evidence that they qualify and deserve a
short sale by their lender.
Getting a lender to approve a short sale is primarily a question of economics. You have to provide hard numbers to show that the amount of money a bank will realize on the short sale is better than the amount it may recoup from foreclosing on the property and selling the property.
Your submission package should include: 1. Hardship Letter - explaining the circumstances that make it impossible for them to pay the full amount of the loan. The seller needs to be able to show true financial hardship. Someone with the assets or the income to pay is unlikely to be considered
2. Proof of employment or unemployment - W-2 forms from employers (or a letter explaining the seller is unemployed).
3. Proof of income - bank statements, two years of tax returns, and other financial documents outlining income and debt obligations. Most lenders will ask if you have an access to a retirement fund, investment fund, 401's, stocks, and how much is accessible and why if these funds are not accessible has to be provided in a written statement.
4. Comparative Market Analysis or CMA Broker Price Opinion or BPO (Mini appraisal) The bank will need comps or a broker’s price opinion showing the current estimated of value of your home. Be very thorough with your Analysis with Closed and then Active listings. Closed comparable are of course what they are looking for above all, but if you cannot find any sold in the last 3 months in the exact same complex or street/block due to the sluggish market, be very detailed with your analysis and calculate by square footage, age, size, views, frontage and upgrades, amenities et...
5. Listing Agreement or Proof of Listing - The Listing Agreement is a Short Sale: any offer is Contingent Upon the Lender’s Buyer’s Approval. The Listing has to be signed and sealed and promoted on the MLS prior to sending your package for
short sale consideration to the
Loss Mitigation Specialist. Often the commission will have a maximum stated by the Lender/Investor.
Tip: In preparing the package, be careful about discrepancies between the seller’s income and the income used to obtain the loan. A big gap may indicate mortgage fraud, unless employment circumstances have drastically changed
Other Items you want to include in your short sale package.
Cover Letter
Authorization to Release Information
2 months bank statements
Supporting Hardship Info – HOA liens, medical/disability statements etc.
Repair Estimate for the property
Contract
Net Sheet
First mortgage holder may ask for a payoff amount from the 2nd
Second mortgage holder may ask for a payoff amount from the 1st
Lender may ask for an Initial Title Report
FHA and VA may have their own forms and special requirements as well
Research links:
From Realtor.org,
Real Estate Blog - Running for a Typical Short Sale Package,