Creating A Short Sale Hardship Letter
In most cases, a Short Sale Hardship Letter represents the initiation of the process given by short sale sellers and their respective lenders. The information that is provided within the package should make a strong point toward why the bank should grant the homeowner an opportunity to sell the home below the unpaid principal balance if the homeowner is facing foreclosure. Furthermore it is essential to have the required information handy as well as the right information to make the best possible case.
What Should a Short Sale Package Include?”Cover
Given that a majority of banks request a short sale package be faxed rather than emailed, the first page of the package should disclose the short sale address on the property, loan number, borrowers’ names, last the last 4 digits of their social security numbers, and the short sale realtor’s contact information. This is information that should quickly grab the receiver’s attention at first glance.
Hardship letter is a written version of the borrower’s current financial situation.
Short sale lenders make their decisions by justifying the current financial situation of the borrowers. Financial worksheets contain the borrowers’ income along with assets and a detailed list of monthly expenses.
Paystubs for all individuals participating in the loan for the last 30 days along with an explanation letter if the sellers experienced a recent reduction in income. If self-employed, profit and loss statement should be given for the previous 6 months.
Mandatory for the previous year as well as for all borrowers that are involved in the loan.
Previous 2 years of federal tax returns or proof that the extension has been filed .
Two most recent bank statements, including retirement and investment accounts.
In some cases, as in the situation for FHA and HAFA, a short sale package is sent firsthand before securing a suitable offer on the property.
This document displays to lenders who are involved the associated costs with the short sale transaction as well as the amount of money in which they will be recovering following the final stage of the short sale process.
Even though each lender is likely to do their own evaluation of the property, it is appropriate to provide them with photos of potential setbacks and repair issues. Are there potential deficits such as growing mold or deterioration that may draw away potential buyers? Is the real estate market in the area declining and are the surrounding homes owned by the banks due to foreclosure? The bank’s short sale negotiator sitting in another state will not know due to the fact they are not present to make reasonable evaluations.
A relative market analysis in the short sale package could possibly position the short sale lender to a set price point. However, in most cases as we covered above, most lenders will do their own evaluation of the short sale property. However, CMA, combined with pictures and quantitative information about the region can be used to your advantage in getting the bank to determine the necessary value of the property.
In a customary short sale, the short sale package is turned in after the property has been declared active on the market and is listed with a local real estate agent. The listing agreement provides credibility to the lenders that the borrower is taking the appropriate steps to market the property in a public light.
Assuming the short sale transaction is handled by an experienced short sale specialist, the homeowner needs to explicitly state to the potential lenders that the short sale agent has the right and ability to go over the details of the short sale with the bank on behalf of the distressed homeowner. Some lenders provide their own standard issued forms that you must complete.
The subjects listed above are the essential components of a traditional short sale package. Depending on the short sale type, there could be possible variations of what items are required.
If you are contemplating a potential short sale on your home, you cannot afford to use an inexperienced short sale agent. You need the assistance and expertise of a short sale team that understands the complexity of each transaction and will assist you in achieving the best possible results. Contact us today to put our knowledge and expertise to the test.
Jeff Corporon, Brix Real Estate, LLC
1315 S Clayton Street, Ste #200, Denver, CO 80210
Cell: (303) 475-1276 | Fax: (303) 496-0534