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How to get short sale approval from the lender.

What is a complete short sale package??

When I speak with the people working in the short sale departments, the most common problem with the packages they receive from agents is an incomplete package. What makes a complete package?

1. The financials from the borrower including tax return, W2 or paystub, recent bank statements, list of their expenses, list of assets if any.

2. Hardship letter from the borrower. The "reason for default" letter should draw tears from the lender if possible. Be careful, however not to exagerate or lie on this letter. Any supporting documentation including proof of job loss, proof of hospitalization or disability or any other evidence of hardship.

3. Complete purchase offer for the property. Most lenders will not take the time to review a short sale package without a purchase offer on the property. Make sure the buyer is aware of the response time from the lender which is sometimes two months. Check with the lender for the response time.

4. Comparable are sometimes required before they order a brokers price opinion.

5. Net sheet showing the bottom line going to the lender. This should include the first and second lender.

6. Listing agreement signed by the seller.

Keep in mind this is the basic requirements and there are other documents that may be required. Check with your lender and ask them for their criteria on short sale approval. Good luck.

Posted by Jason Hector on 10/07/2008 01:46 PM

Comments (9)

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9 Comments on How to get short sale approval from the lender.

OCT

2008

You have got it down pat Jason. Thanks for sharing the short sale process for approval.

Good article. Thank you.

Thanks for sharing

Rich

Charlotte NC

I'd like to know what the change in climate due to the bail out might do to short sales. Will banks be less likely to accept them? stall?

To Mike, Natasha, and Rich,

Thanks for your comments.

To Janice,

Just my opinion...Since the bail out will be for all types of loans and not just mortgages, it will have a minimal impact. The impact will be a slowdown in supply since the fed intends on holding the assets till they can be sold for a profit. The worst assets will be sold to the fed. Those assets which they are having trouble selling. These are not they type of assets that are typical short sales since they will be difficult to get financing, attract buyers, etc. Typical approved short sales are on properties in good condition in desirable areas with buyers making reasonable and not low offers.

Hope this helps. This a great topic for a future blog. Thanks for the question. Jason

You got it! I've had many complete packages approved in just weeks...because they were complete! The lag occurs when you and the lender are not on the same page, then it can take a couple weeks for them to tell you they need another document...then you send it and wait another couple weeks! This is why you need to work with a short sale expert!