A successful short sale package begins with calling the lender who owns the loan or mortgage. Stipulations and requirements for these types of sales vary from bank to bank. The only way to know what is required of you is to make a phone call to the lending institution. Make sure you talk to the supervisor who is responsible for the final decision in the application process, not the “delinquent payment” department. It may take a few phone calls, but by talking to the person in charge you will be better informed about the entire sale process.
A letter of authorization is usually required to begin the process. The letter stipulates that the lender can talk directly with your real estate or closing agent, lawyer, or title company without you being present. This letter should include the address of the property, reference to the loan number, your name, current date, and your agent’s and/or lawyer’s name and contact information. While this letter is not required by law, it will simplify the process for the lending institution, thus making it more likely that they will approve the sale.
A typical short sale package includes a preliminary net sheet, a letter of hardship, proof of current income and assets, copies of the last three months of bank statements, a CMA (comparative market analysis), and, once the sale is finalized, a copy of the purchase agreement. A preliminary net sheet lists the expected sale price of the property minus the closing costs, realtor fees, unpaid loan balances, outstanding payments due, including late fees, and any accrued taxes that may be owed on the property. A realtor can usually prepare this sheet for you.
A letter of hardship is a letter that describes why you have fallen behind on your payments and why the sale of the property will be less than the amount owed on the mortgage or loan. This letter should by as truthful and heartfelt as possible, and should be written by you. In it explain why you have fallen behind on your payments. This could include unexpected medical expenses, a death of a wage earner, or a lost job due to layoffs or cutbacks. Most financial institutions look down on excuses that relate to being fired from a job, unexpected legal fees due to lawsuits, or divorce settlements. Remember that banks do not like to receive partial payment on an outstanding loan. You have to convince them that you need the help.
Proof of income and assets is a declaration of your current financial status. This should current income levels, backed up by back paycheck stubs and bank statements, any other properties or assets of value that you may own, any stocks or bonds you may own, or any number of other things that a bank may classify as collateral. Banks vary greatly on what they require to be included. Therefore, you will need to contact the lending institution to find out the details. Remember you want to be as honest and accurate as possible. Finally, a comparative market analysis will help prove that you cannot sell the property for the value of the loan. This analysis includes recent property values and impending market sales, and can be prepared by your realtor. Collect these documents and letters to create a successful short sale package.