About Me

I have been aTrainer & Educator since 1983. A textbook that I was asked to author in 1986, Maine Real Estate Principles and Practices, is now in its sixth edition. Have been a Member of REEA - Real Estate Educators Association since 1996. Over the last ten years I have been a Member of a Real Estate Commission Task Force for the following core courses: Diversity and Fair Housing, Offers and Counteroffers, Agency, New Laws and Rules 2006

Thursday, June 14, 2007

Required Documentation in a Short Sale

A short sale is the sale of a property for less than the total amount necessary to satisfy the mortgage obligation resulting in a shortfall. Lender requirements for agreeing to a short sale may differ from institution to institution but the following may be required:
  • The original completed Form 1126, Borrower Financial Statement
  • The original signed borrower's letter of explanation and documentation of involuntary inability to pay.
  • A copy of the borrower's two most recent paystubs or vouchers indicating year-to-date earnings
  • A copy of the borrower's signed federal income tax return for the previous year, with all schedules
  • A copy of the listing agreement
  • A copy of the fully executed sales contract with addenda stating that the property is being purchased in "as-is-condition and conditional upon lender approval
  • A breakdown of the seller's estimated closing costs

1 comment:

Lisa N said...

To date I have done about 4 short sales and I am currently working on another 2 at the moment. The first step is to be sure that you have the seller sign an authorization to release information and have this sent/faxed to the lender. Some lenders require verbal authorization as well. Once you have an offer, then you need the information Elaine mentions and I've also found it helpful to include photos of the property (especially if it's in disrepair). Also, push the lender to do an interior appraisal to prove the current fair market value. It's IMPERATIVE that you, as the listing agent, attend this appraisal. There's a ton more work on these short sales and follow up with lenders is crucial. The lenders have so many of these currently that they often need a refresher in what stage you are at in trying to get the short sale approved.
I also ran into a problem that I've never encountered with UGIC. This is an insured mortgage between the lender and UGIC, most commonly used when the loan is in question to begin with. Sellers are not even aware that this UGIC insured loan exists. Keep in mind that most of the short sales are dealing with 2 loans and often times it's not the same bank, so that means more phone calls.