Short Sale Documentation - items to document to help the transaction

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Short Sale Documentation - items to document to help the transaction

Be sure to contact your mortgage lender

The process will start by contacting your mortgage holder and getting in touch with the department that will assist you with your short sale process.  Generally the homeowner will need to contact the Loss Mitigation department. 

Letter of Authorization

Your mortgage lender has access to all your important personal and credit information.  You must submit a letter of authorization so that each of the professional representatives assisting you with your short sale can have easy access to the details regarding this privileged information.  The letter of authorization allows your Attorney, Real Estate Agent and Title Company to expedite your time sensitive real estate transaction.

Hardship Letter

The hardship letter is a simplistic process.  The homeowner needs to write an explanation of hardship and explain their reason for short selling their home or real estate investment.  In recent times, the economy and falling house prices could be a good place to start.  Historically, a loss of employment, personal illness, death or divorce could each entail circumstances that could explain your personal hardship.  Be honest and explain whatever hardship is causing you to not meet your financial obligations. is here to assist you in any way.  Feel free to give us a call with any questions. 

Financial Statement

Part of the short selling process will require you to provide financial documentation.  You will be expected to provide checking and savings account balances.  If you hold any value in money market accounts or own any stocks or bonds it must be documented.  Perhaps you own other Real Estate?  Those figures will have to be submitted. 

Estimated Bank Proceeds

Your Attorney, Real Estate Agent or Title Company can help you estimate a HUD-1 settlement statement that will document the estimated transaction fees, outstanding loan balances, unpaid payments and outstanding late fees left uncollected.  This HUD-1 document will also value an estimated commission owed to the professionals assisting you with the transaction.  In the end, this process will help to evaluate the total costs needed to transfer the Deed in Lieu to the lender.  Total up all loans against your property.

Real Estate Value

Another step in your short sale process is to provide documentation of your property’s fair market value.  This can be done by a professional appraisal company or to provide documentation from a comparative market analysis. 

Talk with your lender and ask them the process they want you to follow while finding the value of your property. 

Sales Agreement

Your mortgage lender needs to be provided with the purchase contract your Real Estate Agent or Attorney has negotiated for you.  It is essential that you provide documentation of the sales agreement with the new proposed buyer of your bank short sale.   

Submit Short Sale Proposal

Subtract the overall amount of money that is owed to your lender against this property from what you expect to earn through the real estate contract you have negotiated in your sales agreement.  The number remaining provides you with the amount you are “short”.  After you have prepared all your documentation and submit your short sale proposal to your financial lender, the amount you are “short” will be considered when the mortgage holder makes their final decision.

In the End

The process will bring you relief when you are able to sell your property.  If your lender approves the sales agreement you negotiated and your buyer is serious then you are able to complete the short sale of your real estate property.  The lender will want to see the final agreement that gets recorded to be sure that the (seller) is not gaining financially from the devalued real estate transaction.