Tuesday, May 4, 2010
Short Sales: The Process
You have experienced a loss in your income and you are behind on your mortgage. To avoid foreclosure you have decided on a short sale. First you must ask your lender to agree to a short sale though. They will have certain requirements to meet and documentation that you will need to submit. The following steps are what you can expect when you make this request:
• Write a hardship letter describing your financial situation. Explain how this situation came to be. While lenders are all about the money, they are human. It is not uncommon these days for job loss or medical situations. Be honest with them. Keep the letter true but sad.
• In your letter include a comparative market analysis. This will require some homework on your part. Markets decline, property values fall and these could be reasons your home won’t sell under normal circumstances. Your real estate agent can assist in preparing the CMA.
• You will need to provide proof of income and all your assets. Be honest in this area and list anything that is considered of tangible value. Your lender has to be assured that you are not able to make the payments. Provide copies of your bank statements and any deposit that is unaccountable or large withdraws of cash will need an explanation. Note if there are deposits that will continue for any length of time.
• Next prepare a net sheet that shows what you estimate the sales price to be of your home. Include any unpaid loan balances, the outstanding payments, late fees, and any real estate commissions based on what your real estate agent provides you. The bottom line needs to show there will be no left over.
• After all this information is gathered and compiled, write a letter of authorization for your lender. This will be required before they disclose anything about your loan. Your letter should give authorization for your lender to share your information with any party that may have interest in your short sale. This letter should be dated and include your name, property address, loan reference number as well as your agent’s contact information.
• Now it is time to call your lender. Chances are you will end up making multiple phone calls to get to the person that makes the decision approving short sales. You want the name, phone number and email address of the person who makes the decision.
Once your short sale is approved by your lender and you reach an agreement with a prospective buyer, you will need to furnish your lender a copy of the offer. Provide a copy of the listing agreement and be prepared for the lender to renegotiate the terms. Remember, your lender is not obligated to accept these terms, they are calling the pitches.
Sound too complicated to handle on your own? Get help from a short sale negotiator. Short sale negotiators know the process, paperwork and most importantly, they know the lenders and can make sure all your paperwork is in order and your short sale speeds through to acceptance.