Every Bank requires certain documents in their Short Sale packages. What follows are the most frequently required documents that the Banks need in order to begin considering 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.
Begin the hardship letter with a short description of the property, the loan number, as well as an apology for the situation.
The hardship letter should detail in great depth the circumstances that led to the homeowner becoming behind on their payments. Did they end up with very expensive medical bills? Were they fired or laid off from their job? Maybe they retired and experienced a substantial drop in their monthly income. They might have had an adjustable rate loan that increased their monthly payment dramatically. The home might be over-leveraged. Each one of these is a legitimate example of a hardship that should be explained in a detailed letter to the Lenders 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.) 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 has a business, the Lender will want to see profit and loss statements and a current balance sheet.
4.) The bank also needs the last two months' banks statements to get an idea of what your spending habits are like. Homeowners with lots of credit card debt might be able to get a debt counselor to work with the Lenders in order to lower the payments of perhaps forgive some of the debts altogether.
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.) The bank also wants to see a realistic budget for the homeowner. If the homeowner's budget is $300 above or below balanced on average, they might be able to restructure their finances if they prefer to save the house.
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.) A offer from a buyer. This offer, including a power or attorney that provides you with the right list the property as well as negotiate the Short Sale on behalf of the owner. Without these, you are not able to do a Short Sale deal.
9.) A Power of Attorney. This document gives you or your negotiator the authority to speak with the Bank. You should get this document signed by the homeowner first thing so that you can ask the bank if they have any unique instructions for the Short Sale package before it is sent in.
After you have all of this information, you are well on the way to getting your short sale deal done!
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