What You Need To Include In A Short Sale Package

Banks all require that you provide them with a certain set of documents in a Short Sale package. The following are the documents that most banks all require before they entertain a Short Sale

1.) A detailed explanation from the homeowner that explains the hardship that caused them to miss payments along with an explanation of the steps they have taken to rectify their situation.

The letter should begin by identifying the property, including the loan number, and a formal apology for ending up in this situation.

Next, have the homeowner explain in detail what led to the missed mortgage payments. Were there expensive medical costs? Did the homeowner lose their job? Perhaps they retired, which reduced their monthly income significantly. Did they have an adjustable rate loan that adjusted up? Did the home end up over-leveraged? Was the homeowner forced to move to to a job transfer, and the house is sitting unsold? These are all examples of acceptable hardships that should be detailed in the hardship letter that is sent to the Loss Mitigation Department of the Lender.

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.) Everyone who contributes to the household income should submit their two most recent pay stubs. This can be payment from an annuity, child support, alimony, and any commission income from the last few months.

3). If the homeowner is a business owner, they should also send a balance sheet and a profit and loss statement to the Bank.

4.) In order to get an idea of the homeowner’s spending habits, the bank will want to see your last two months’ bank statements. If the homeowner has a lot of credit card debt, they might be able to get a debt counselor to work with the Lenders to restructure the debt to have lower interest rates and monthly payments or forgive some of the debt altogether.

5.) Tax returns from the previous two years. The bank wants to see these so they can get an idea of the homeowner’s financial security as well as their ability to make good on their debts. This also comes in handy for the bank because they can see if the homeowner has any resources that the lender can tap into if they foreclose on the property and decide to pursue 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.) Your offer. You should also provide the bank with your power of attorney that gives you the ability to negotiate with the bank and list the property with a real estate agent on the owner’s behalf. If you don’t have the documents, you won’t be able to do these types of deals.

9.) Your Power of Attorney. You need a document that provides you or your Short Sale negotiator with the authorization to speak to the Lender for the owner. The best method is to get this document signed first so that you can talk to the bank in the beginning and get any special requirements that the bank has for the Short Sale package before you submit it.

After you have all of this information, you are well on the way to getting your short sale deal done!

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