What is a short sale?
A short sale is a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan.
Lenders may approve short sales for 2 basic reasons: the home is worth less than the sellers owe on the existing mortgage(s), or the sellers have a verified hardship.
Some examples of hardships are:
One of our first orders of business will be to produce your financial summary. This is a financial package which we will submit to the lender in order to request a short sale. The New HAMP / HAFA regulations enacted in 2010 almost ensure that the lender will work with a home seller if certain conditions are met. This financial summary will likely include.....
- Military Deployment or transfer
- Geographical Job transfer
- Unemployment / reduced income
- Medical emergency
- Unexpected family addition
- Certified Letter of Authorization, this will allow BVR agents to communicate with the lenders representative.
- Financial Net Sheet
- Your Hardship Letter
- Most recent payroll stubs
- 2 months of bank statements
- 2 years of tax returns
Upon receiving an offer on your property, we will submit a complete Short sale package. This will include the previous documents, along with.....
- Bay Vista Listing Agreement
- Bi-lateral Purchase Agreement
- Short Sale Addendum
- Buyers Proof of Funds or Qualification Letter
- Copy of Buyers Escrow Deposit
- Comparative market analysis
What happens next?
Traditionally the lender will review the package and several days till pass before hearing back from the bank employee. This is a simple function of the overwhelming amount of packages arriving at the lenders every month causing a backlog. It is important that the package is as complete as possible and often it will be scanned and submitted multiple times.
It is important not to become discouraged. If the package is missing a document or two, the representative will often notify the agent and allow a day or two to submit the missing forms or documents. If the package is insufficient to an extent that the lending institution deems it impractical to continue with the package, they may simply shred the Short Sale Package, forcing the seller and real estate agent to begin anew. (Banks are not in the business of training agents, and will not tolerate ineptness, it is imperative that your REALTOR carry the SFR or CHS designations.)
Following is a typical short sale process at the bank:
- Day 10 to 30: Lender may acknowledge receipt of the file.
- Day 30 to 60: Primary negotiator is assigned.
- Day 30 to 60: Primary negotiator will order a BPO.
- Day 60 to 90: Second negotiator may be assigned.
- Day 90 to 120: The file is sent for review or to the PSA.
- Day 120 to 365: Several rounds of negotiations will ensue.
Typical terms that the lender will request are.....
- That all parties sign an Arm's-Length Affidavit.
- That the seller sign a promissory note for the deficiency.
- That the seller bring money to the closing table.
While the lender will certainly ask for various items during the transaction, many items are negotiable and not all will end up as part of the final transaction.
If you'd like to contact me in regards to your short sale, please fill out the following form and I will return your message as soon as possible.
I look forward to hearing from you and assisting you and your family!