Short sale information must be compiled into an acceptable package before it is submitted to your lender. Most Realtors who have short sale experience agree that it is better to submit a complete package to your lender as opposed to sending pieces of the package at different times. Mortgage companies are notorious for losing paperwork, and they often deny short sales because they claim that certain documents were never received. If you are applying for a short sale, you will want to provide all of the required documents to your lender in the simplest and most organized manner possible.
It is essential to read the instructions from your lender on how to apply for a short sale, compile all of the paperwork and documents, and then submit the entire package in the manner the lender requests – which is usually via fax or e-mail. Sometimes lenders require documents to be mailed via the United State’s post office, FedEx or UPS.
Typical Components of a Short Sale Package
While every mortgage lender has its own specific requirements for the short sale information required, there are typical documents which are usually mandatory. Most lenders will provide you with a checklist of requirements, so make sure to follow the list precisely.
Following is a list of the items that your lender will probably ask you to submit:
Proof that the house has already been listed: This type of document is normally referred to as a “listing agreement.” It must be executed (e.g. signed by both you and your real estate agent) and it must show the terms of the agreement – including the date that the property was originally put up for sale. Mortgage lenders sometimes require proof that the property has been listed for either 30, 60, or 90 days before considering it for a short sale.
A legitimate and signed purchase contract: Before they consider a short sale, most lenders require that you send proof that someone has offered to purchase the property. This offer cannot be verbal – it must be written and signed on a legitimate purchase contract.
Proof of your financial hardship: This document is normally referred to as a “hardship letter.” A hardship letter is written in your own words, and it describes in detail the reason that you feel a short sale is necessary. Typically, a hardship letter is used to describe the real estate market in your neighborhood and a description of why you are struggling financially.
Financial documents: You will use your hardship letter to describe your dire financial status, but you will need to back up the facts with proof. Mortgage lenders will usually require you to send copies of the last three months of your bank statements for all of your accounts, copies of your tax returns for the past two years, and copies of your payroll stubs from your employer. If you are employed by a company, you will need to include W-2s with your tax returns, and if you are self-employed, you will need to include profit-loss statements and copies of your 1099s (if applicable).
Besides the short sale information listed above, your lender will likely ask for additional documents such as an estimated HUD-1 settlement statement, repair estimates (if necessary), and a signed “authorization to release information” form. Some lenders also require other documents, which an experienced Realtor will be able to help you complete. Doug James is a certified Distress Sale Property Expert and his Wise Listing Team has the knowledge the help you through the difficult maze of a short sale. Call us today at 303-814-3684 for a confidential consultation.
Comments(0)