Short Sales – Why Does the Lien Holder Ask for Lots of Items?
I hear this a lot from clients. It is very hard to slog through all the requests. They seem endless! But there is a reason for most of them, they aren't all pointless. I like Melissa's comments. I hope they help you understand the process somewhat better if you are working on a short sale.
I recently had a short sale seller who asked me why the bank requests so much stuff. This seller wanted to know why he had to submit tax returns, bank statements, and pay stubs in order to participate in a short sale transaction.
First off, I think it is always important to keep in mind that all short sales are subject to lender approval. The bank is NOT required to allow a seller to participate in a short sale—just because.
As part of the short sale package that the bank requires in order to review a borrower for a short sale, most lenders require pay stubs, bank statements, and tax returns. Why? Well, the bank wants to confirm that there is a verifiable hardship, which puts the seller in a situation where s/he cannot afford the property any longer.
Banks often also run the short sale seller’s credit report, so the bank employees will know if the borrower is current on all other debts.
I’ve seen short sale sellers who state that they do not have a bank account. Then, they provide a copy of their paystubs, which are direct-deposited into a bank account. Don’t try to “pull the wool” over the mortgage lender’s eyes. Between running the credit, checking the pay stubs, and reviewing the tax return, the lender will know whether the short sale seller has a verifiable hardship that will qualify the seller to participate in a short sale transaction.
What’s the best way to get the short sale approved quickly? Cooperation. Providing accurate documentation in a timely manner will assure that the short sale gets approved as quickly and efficiently as possible.
Photo: flickr creative commons by LollyKnit
Broker, Realtor®
DRE #01324959
Broadpoint Properties, Inc
San Diego County Short Sale Specialists
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