Program HR 3648 | Next to the BPO, the most important element of a short sale is having “clean” documents. The definition of a clean document is that it is accurate, completed by all necessary parties (fully executed), is current and it is clear and readable (ACCC).
Program HR 3648 processes hundreds of short sales each week with a variety of documents in a variety of conditions—most are clear and easy to read, but sometimes we have to delay a short sale submission to ask an agent to complete incomplete documents—all blanks, signatures, initials, and dates—or for one or more documents to be re-sent to us because they are not readable. Lenders carefully review the documents we send them and, if a document is not fully executed, they will require a re-submittal where all the Is and all the Ts are properly dotted and crossed.
Lenders will work the easiest, cleanest files first and most often, so a file that is compromised by difficult-to-read or incomplete documents means extra work, and delays waiting for the new versions to arrive.
Most agents want to speed up the short sale process—a process where the term “short” is a total misnomer because the length of time it takes to do a short sale can only be called “short” in comparison to the length of the last Ice Age or how long it takes to row across the Atlantic with only one oar.
The Program HR 3648 processors know just how vital clean docs are, and we work with our agents to ensure that the documents they send us fit the ACCC standard. A little time spent at the beginning of a short sale will make a big difference in how long the process takes and how smoothly it will proceed. Once an agent knows exactly what the lender needs document-wise, he or she can prepare the owner(s) and the buyer(s) so the documents furnished will match the lender’s parameters, meet the ACCC criteria and won’t require a re-submission.
Owner financials must be the most current available. Sending out-of-date bank or pay statements wastes everyone’s time. As the agent, you have a responsibility to let the owners know what you need and to help them understand that their efforts affect the time it will take to secure an approval and are essential to the ultimate success of the short sale. For instance, lenders want 90 days of bank statements—all accounts, all pages (even the blank ones), and pay statements for 60 days for all income-producing parties in the household. They also want Income Taxes, including W-2s with the majority of lenders requesting full returns—all pages, all schedules. If a lender requires their own short sale packet, the owner(s) will need to complete this even if some of the information is redundant and is included in other documents. A lot of time is wasted when owners resist document requests, and that time is better spent by supplying the documents as quickly as possible, shortening the time the negotiator has to wait, and speeding up the process.
Owners will also be required to submit a hardship letter with details about their financial circumstances—this letter must establish the hardship situation that prevents the owner(s) from meeting their mortgage obligation. It must also request that the bank allow a short sale. In addition, a financial worksheet must be completed by all parties on the loan even if one or more or all of the parties do not have an income.
What you do for the financials is also true for the purchase documents. The ACCC standard applies—the purchase 
agreement and contract addenda must be fully executed by all parties: the buyer(s), the owner(s), the brokers/real estate agents on both sides. Applicable blanks must be completed with a date, signature, initials, agency information, owner or buyer information. The lender will want to see either a proof of funds letter from the buyer’s financial institution on letterhead, dated and signed by a bank officer, noting the amount of cash available or a pre-approval letter from the buyer’s bank or mortgage institution on letterhead, dated, and signed with a specific loan amount detailed.
In Program HR 3648’s electronic, web-based world, our agents often fax documents back and forth for execution. That is convenient, but it often wreaks havoc with our ability (or the lender’s) to read a 3rd or 4th generation-faxed document. We all need to consider the time we think we save by faxing documents several times to collect all the necessary information vs. the time we have to spend redoing illegible documents. We also think it’s important to invest time to ensure that the documents you send are what the lender needs, have all the information required, are fully executed—putting an X on every line helps those signing, initialing and dating to keep track of each line or box that needs their attention—and, of course are current and can be easily read. Imagine how much time and emotional energy you, the agent, will save if your documents are “clean” and you don’t have to call the lender, be on hold for an interminable amount of time only to hear the disappointing news that the documents sent were inadequate or unreadable and need to be revised and/or re-sent.
As noted at the beginning of this blog, incorrect, unreadable and unclear documents do not a fast and effective short sale make! So, here at Program HR 3648 we want to share our successful experiences with you, knowing that you will find the process less frustrating and quicker by making a few, simple, but important changes, in how you handle your documents and your short sales. Keep it clean!
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