The sale of a property where at least one of the underlying lien holders will be requested to accept a compromised payoff in exchange for the release of their Trust Deed / Mortgage.
Check your Preliminary Title Report for the Recording of a Notice of Default.
This means the subject property is in foreclosure and will provide a date that the property is scheduled for sale at the courthouse. A property does not necessarily need to be in foreclosure for you to complete a short sale. A property is in default at the point the owner is behind in payments.
Each Lender will have a Loss Mitigation Unit that will handle the negotiation of their short payoff. You will need to provide them with the customers name, the loan number for the subject account, social security number and written authorization from your seller. This will allow the lender to work with you as the representative for the seller.
At a minimum, the Lender will require the following:
- Copy of the Sales Agreement
- Preliminary Title report
- Estimated Seller's Cost Statement
- Proof of Value
- Additional items may also be requested
Once you have forwarded the required information to the underlying lender, pass their contact name and number on to your escrow officer. Your Escrow Officer will be a secondary source to the lender, for any questions pertaining to the statement and Preliminary Title Report.
However, since your Escrow Officer is a neutral third party, Escrow will be unable to participate in the negotiation with the subject lender.
The lender will forward a demand letter to Escrow providing their requirements for time restrictions and payoff.
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