Assembling the short sale package
Each lender has their own requirements to include in a short sale package. Here are the most common things lenders require before they start considering a short sale:
1.) A hardship letter from the landlord describing what is causing the late payments and what the landlord has done to try to change the situation.
The letter should begin with a brief identification of the property, the loan number, and a sincere apology for the situation.
Then the landlord must state in his own words exactly what caused the late payments. Extensive medical bills? Loss of work? Did the owner retire, substantially reducing income? Has an adjustable rate loan been readjusted? Is the house underwater on your mortgage? Has the owner moved to another part of the country and the house is not selling? These are all valid difficulties that can be explained in a letter to the Lender’s Loss Mitigation Department.
Also include a description of any efforts the landlord has made to resolve the problem. Found a new job? Have you eliminated all discretionary spending?
2.) The two most recent pay stubs for each job performed by all family members contributing to the household income. This includes pensions, regular withdrawals from an annuity, commission income for the last two to three months, child support, alimony, etc.
3.) If the owner owns a business, the lender will want to see profit and loss statements and a current balance sheet.
4.) Bank statements for the last two months. They say a lot about spending habits. A homeowner who also pays a large amount of credit card debt could 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.) Tax returns for the last two years. They provide an accurate picture of financial stability and ability to pay. It also gives the Lender an idea of other resources that could be taken advantage of if the Lender goes through foreclosure and files a deficiency judgment against the homeowner.
6.) A realistic budget. If the budget is around $ 300 even in the average month, it may be possible to restructure the budget so that the owner can save the house if he prefers.
7.) A listing agreement with price. The real estate agent should include his normal commission and closing costs in the listing agreement. Lenders who approve short sales also pay 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 make these deals without having both documents.
9.) Power. You should have an authorization form that gives you or your negotiator permission to speak with the lender. This is actually the first document you need to get from the landlord so that you can get special instructions from the lender before shipping the short sale package.
Just collect these documents and you are on your way to making a short sale!
