Submitting A Complete Short Sale Packet

Mike McCoy
November 8, 2011 — 946 views  
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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 ca'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.


Mike McCoy

The Short Sale Formula provides a step-by-stop formula to show real estate investors how to put together a short sale packet, outsource short sale files, conduct back-to-back closings and finance short sales once they are complete. The Short Sale Formula is owned and operated by, LLC.