Inside of the Real Estate circle, 2012 has been dubbed “Year of the Short Sale”. In writing this I wanted to create a one-stop source for all of your Short Sale needs. So here you are!
If I just so happen to be missing a particular lender/bank who you’re working with and/or any of your own personal short sale tips, please let me know, I’ll add it with links and all! I would also be very happy and thankful for the assistance and advice.
Intro to Short Sales
The short sale is way better than having to foreclosure on your home. Instead of waiting seven years for your credit to rebuild it will only take two, plus you’ll not be responsible for the remaining balance on your loan.
In order to initiate a short sale it is best to wait until you have an offer on the property, most banks encourage this. Some will let you initiate a short sale but give you between 30-90 days to furnish an offer, and when you don’t, you’ll have to start the process all over again.
Initiating a Short Sale
The “process” involves a lot of forms, signing and document collection. The first two forms should be the 3rd party authorization form (to speak on the borrower’s behalf) as well as the most current mortgage statement (to obtain the loan number as well as identifying the lender). Find the phone number for the loss mitigation or homeowner assistance departments as well as a fax number. There is nothing like faxing 64 pages of documents to the wrong department to slow up your “short” sale, so make sure it’s the fax number for the correct department. Check the list of banks below for phone numbers, fax numbers and bank specific documents for many different lenders and their short sale departments.
Cash Incentive for Sellers?
That’s right, the banks even offer cash incentives for those who quality to short sale their home or go deed-in-lieu-of-foreclosure. I’ve personally seen anywhere from &750.00 to $10,000.00 being paid via FHA/HAFA seller incentives from the lender. There have even been reports of sellers getting as much as $35,000.00 to move out and short sale their home. There is also a report of Chase giving $55,000.00 to the borrowers. So don’t hesitate to see if your seller/borrower qualifies for any of these incentives.
The financial documentation you need to collect from the seller/borrower/co-borrower is usually along the following:
- Listing Agreement
- Purchase Contract (if any)
- Last 2-4 consecutive weeks of pay stubs (usually 1 month)
- Last 1-2 consecutive months of bank statements (usually 2 months)
- Last 2 years of tax returns/w2’s
- The IRS 4506-T (Request for Transcript of Tax Return)
- A form of their financial statements showing their annual income and expenses
- The Letter of Hardship (a BRIEF letter explaining reason for default, signed/dated by seller)
- Proof of Hardship
- And any bank specfic short sale forms/packages
When you receive an offer, make sure to fax it along with the above financial information required from the bank to be furnished by the seller/borrower/co-borrower.
After Document Collection
After you’ve collect all the nescissary documents (along with that fully executed purchase contract) fax them to the correct fax number of the lender’s department in which you’re initially dealing with. That could change so it’s important that you keep a detailed log of every step you’ve taken and to whom and when you talked to the bank, the phone and fax number of each and every negotiator you’ve been assigned, as well as keeping and printing any and all emails and fax receipts. Never know when you might need to let the bank know on which day and time you sent over the email/fax in order to assist them in finding documents faster.
There will also eventually have to be a full title search done on the property to see if their are any outstanding liens against the house. You wouldn’t want that to sneak up on your deal at the end and put the whole kibosh on your closing. From what I understand in most cases it’s the buyer side who orders and pays for the title search.
Negotiating a Final Price
Also be aware that in order for a reasonable price has to be determined by both sides, yours (if you’re the listing agent) and the bank’s. So you’re most likely going to have to perform a CMA, to justify your listing price, and especially if the house has damage get lots of photographs of it to help your case. The bank will have a BPO/appraisal ordered to determine their idea of how much the home/property is worth. And whatever number the bank’s appraisal produces, your offer has to be near or pretty damn close to it to have a chance of the mortgage investor accepting it. Otherwise you’ll have to either: convince the bank that the property is deteriorating and/or in poor condition, has damage and is not worth their suggested value then have your own appraisal issued; convince the buyer to come up on their offer; go back out there and entice a higher bidder.
Short Sale Links and Tools
Bank of America
Home Returns Division
Seller must call this department first to request a recommendation for a short sale.
Phone: 1-(800) 669.6650
Fax: (866) 808.5050
Short Sale Division
Bank of America: Short Sale Resources Web Page
Phone: (866) 880.1232
Fax: (866) 808.5050
Short Sale Department
Chase: Short Sale Resources Web Site
Chase: Short Sale Information Packet Web Page
Phone: (866) 483.3153
Fax: (866) 220.4130
3rd Party Auth Form Fax: (614) 422.2501
Green Tree Servicing
Vericrest Financial: Homeowner Assistance
Homeowners Assistance: 1-(866) 650.0968 option:4
Loan Modification Financial info Form
Short Sale Department
Vericrest Financial: Short Sale Departments
Short Sale/Loss Mit: 1-(866) 650.0968 ext. 4625
Loss Mitigation Department
Webster Bank: Homeowner Assistance Program
Phone: 1-(800) 270.5300
Homeowner Assistance Program: 1-(800) 270.5400
Loss Mit Fax: (203) 294.8369
Financial Disclosure Statement
Short Sale Department
Wells Fargo: Help for Homeowners Web Page
Phone: (866) 234.8271
Loss Mit: (866) 903.1053
Fax: (866) 837.9108
Loss Mit Fax: (866) 590.8910
Short Sale Listing Addendum
Short Sale Contract Addendum
Arms Length Transaction
3rd Party Authorization
Limited 3rd Party Authorization
Short Sale Authorization
Financial Hardship Worksheet
Closing Date Extension
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