What is in a Real Estate Short Sale Package?6 months ago
You have made the decision you want to attempt to do a short sale of your home. One of the most important parts of the process is getting a short sale package, and making sure you follow every step, fill out every form, and cross the T’s and of course, dot the I’s.
Where will you get the short sale package?
It will come from your lenders loan mitigation department, you can usually reach them through customer service. Sometimes they have different names such as, workout department, or loan assistance department, they may even have an actual short sales department that specializes in the process. Once you find the right department, ask them to send you a short sale package.
A few things you can be sure will be going into your short sale packages. First, a hardship letter, defining why you are in the situation requiring approval of a short sale. This could include a death in the family, extreme medical bills, or most commonly loss of income. Second, in order for a short sale to be considered, you must have a contract or purchase agreement from an interested buyer. The third item that will be required is a financial report, showing your current income, expenses, assets, and liabilities. Commonly you will need to provide pay stubs from the last couple pay periods, the last 2 months bank statements, and likely tax returns for the last couple years. Your financial information needs to be very complete including expenses you have for food, utilties, car payments, credit card payments, and so on. The lender is using this information to verify you are truly unable to pay your obligations on the loan. Fourth, you need to provide proof that your home’s value is now less than the loan balance, usually through an appraisal, or a broker’s price opinion. Another likely required item is a HUD1 net sheet, that will detail a lot of financial and transaction detail. This is required by almost all lenders now.
This list is not complete, but should cover many of the basics your lender will request in their short sale package. Make sure you study your package from your lender to get every piece of information requested before sending the package to them. The short sale process already takes long enough and can be a bit challenging, but will triple in difficulty and length of time if you miss important forms and documents your lender wants. When you are attempting to get out from under a difficult situation, you don’t need the added delays an incomplete or inaccurate packages may cause you.
You may want to enlist the help of a broker who is experienced in short sales to review your package with you, before you submit it to the lender for approval. Once you are confident all is in order, you need to submit your package to the lender, and then you start the approval waiting game. I hope this gives you a little better idea of the paperwork you can expect in initiating a short sale.