Special offer

Lender's requirements for a short sale package.

By
Real Estate Agent with Alain Pinel BRE 01367196

The short sale packages are pretty much the same today....I think the lenders are making their requirements almost standard. In the case of a short sale property with more than one loan, this is most certainly useful and helpful so that we don't recreate the package.

From what I've encountered, lenders rarely touch a file until after there is an offer (accepted by the Seller) on the property. If the offer is substantially less than list price, or if it is substantially less than what is owed, the asset manager or loan negotiator submits the file to their committees for review and for a decision.

Here's the latest list of requirements that I received from the 2nd loan lender. Always include pre-HUD statement and a report on activity of showing, etc. 

In order for the bank to address your request in a timely manner, please adhere to the below listed required documentation. Please note, if the information is not provided or does not have all pertinent information and signatures, it will not be reviewed for consideration. 

  1. Please send ALL required documents in ONE PACKET AT THE SAME TIME or it will not be reviewed.
  2. Bank will not contact you if a required document is omitted.
  3. Turnaround time is subject to the Real Estate Department's current volume, completion of due diligence and subsequent review and approval.
  4. Upon receipt of a completed short sale packet, turnaround time will be at least 10  (realistically --- it's 45 days or longer if the package is incomplete) business days.

**Calls prior to that date for status will not be returned.**

REQUIRED DOCUMENTS:

  • Copy of the Contingency Sales Contract or Purchase Offer Contract

-This form will demonstrate that a prospective buyer has made a purchase offer.  It is not necessary to provide credit information about the proposed buyer, please do not include buyer's financials.

  • Pro forma or pre- HUD Statement reflecting that there is $0 funds going to seller, must include payment and commission amount(s) to all parties. NCB must be receiving funds for the offer to be reviewed. -This form shows the breakdown of funds from the sales price.  The bank requires an actual federal HUD-1 form, not a title agent's Estimated Closing Expense Form.
  • Copy of the Realtor's Listing Agreement. Agreement must be signed.

-This is the contract between the Bank's Customer and the Realtor giving the realty company permission to place the property on the market.

  • A COPY OF THE LISTING ACTIVITY !

-This would be a listing of all sales activity regarding the subject property including showings, open houses, and advertising efforts.   This is the Realtor's opportunity to provide relevant information regarding marketplace challenges, including obstacles to sale as well as demonstrative scaled reductions in offering price and marketing fees.

  • Authorization to release information to the Realtor. Form must be signed.   

-This letter will be written by and signed by the Bank's Customer allowing the Bank to discuss and/or release any info to the Realtor pertaining to the subject property.

  • Letter of written authorization to perform and interior/exterior bpo. Must be signed.

-In order to perform an interior/exterior appraisal the Bank will need a written ok with a signature by the Bank's Customer to perform the inspection.  There must be a telephone number provided with a contact name so that an appointment to access the property can be scheduled.  The letter must specifically state that the Bank's Customer gives his/her permission to complete an interior/exterior appraisal of the subject property.

  • Hardship letter from our customer

-This will be a letter drafted and signed by the Bank's Customer stating the reasons and/or hardships that led to the need for a Short Sale or Settlement.

  • Financial Statements/Asset Information

 This includes, but is not limited to, six months of bank statements, W-2 forms or 1099 (or any tax forms), last two pay stubs, 401K statements, and  IRA statements for all signers.  If self-employed please highlight on bank statements when deposits have been made.

Comments (5)

John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Great information Pacita.  Thank you for sharing.  I bookmarked it for future reference.

Jul 23, 2008 08:00 AM
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

As an example, we have a short-sale, got all the docs needed, and had almost 2 dozen offers. The bank selectd the highest and best and it was 9 months before the bank approved the short sale! that is NINE MONTHS!! Short sales are anything except short.

Jul 23, 2008 09:36 AM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Hi, Bob and Carolin

How long did was the property on the market before it received the offers?

And how long did it take for the bank to respond to the offer? Did they do multiple-counters?

We count the days from the time we send the complete package, including the seller-accepted offer and back-ups....and yes, it takes a long time. 45 days is about the average. But 9 months? Ouch!

Jul 23, 2008 09:45 AM
Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate

It must have been one of the big banks.  They seem to take the longest and give the least back.

Jul 23, 2008 01:47 PM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Update: I spent so much time and money preparing a short sale package for one of my listings. It was a thing of beauty --- I provided more than what the lenders asked for:

  • Copy of offer
  • Copy of lisitng agreement
  • Info on current marketing activity
  • Hardship letter
  • Copies of 2 most recent pay stubs, bank statements, tax returns
  • Financial statement
  • Authorization
  • Copies of marketing materials and info on my marketing plan

Each section was index tabbed/divided,

But when it came to Downey Savings, it was to no avail. They won't approve short sales! AAARGH!

Jul 30, 2008 09:04 AM