If you’re going to be working on a short sale as
a real estate investor, a realtor, or even a
homeowner, one of the most important things
that you need to do is put together a
complete short sale packet.
Without a complete short
sale packet, your file will not even be opened,
let alone reviewed. In other words, you can
forget about getting your short sale approved
if you can’t even put together a proper package.
So how do you ensure putting together a proper
and complete short sale package? Well the first
step is realize that every single lender in
America has different requirements. So what
does that mean to you? Well, that means that
the first step is to contact that specific lender.
I would recommend asking for the loss mitigation
department, or the workout department, or the short
sale department. Every single lender has different
terminology.
Remember that many lenders won’t even send you a
generic package unless you have a signed Letter of
Authorization from your borrower. However once you
have this letter signed and dated by your borrower,
including their loan number and Social Security Number,
you can easily obtain the short sale packet from the lender.
Once you have the packet back from the lender,
make sure you review it carefully. Different lenders
have different requirements. However, all lenders
have some basic requirements that you’ll need to
get your short sale packet complete.
Next is a hardship letter, which is written by the
borrower and should indicate exactly why they fell
behind on their mortgage payments, and why they
can’t afford the property anymore. It should be
typed and then signed by each borrower on the loan.
A purchase and sale agreement also needs to be
included in the packet, showing that the homeowner
does indeed want to sell the home.
A borrower’s financial information form is also needed.
This shows the lender a snapshot of the borrower’s finances.
The borrower has to indicate exactly how much money
he is making, each month, after taxes. He is then
comparing that to his monthly expenses. Monthly
expenses not only include his mortgage and taxes,
but all of his bills, utilities, transport costs,
groceries and anything else that he spends his
monthly income on.
The homeowner is also going to have to compile
2 months of bank statements and pay stubs,
along with his last two years of tax returns.
Investors should also include other supporting
documentation to strengthen their argument
about the value of the property. This can
include comparable sales, otherwise known
as “comps”, along with contractor repairs
for estimates.
Finally, a HUD1 or a “net sheet” is something
that every lender is going to want to see
included in your short sale packets.
Remember that every lender is different, and
will have different guidelines, but if you
follow the outline of this article, and
combine that with the specific short sale
packet from the lender that you’re working
with, you should quickly, easily and accurately
be able to complete a short sale packet,
and have the lender review your file.