Short Sale Proceedure
Usually when a homeowner is facing a financial problem and as a result is finding it difficult to make the monthly mortgage payments, he can opt for a short sale. |
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A short sale is seen as a way to avert foreclosure or bankruptcy which can adversely affect a homeowner's credit scores. Also, in a short sale, the amount paid for the house is less that what the homeowner owes on the mortgage.
In order to go ahead with a short sale, you need to get approval from your lender. However, the process is not so simple. That is why it is best to know a short sale procedure. Also, by knowing a short sale procedure, you can remove any obstacles or problems that may exist to hasten the sale process.
The first thing that you should do is contact the Loan Mitigation Department of your lender and figure out who has the authority to approve a short sale. If you do not want to do this, you can ask your lawyer or a licensed real estate agent to do it on your behalf.
Then write a letter to your lender authorizing your real estate agent and/or your lawyer to seek information about your mortgage. This is required by law. So, there is no way around it. Make sure the letter has your name, the address of the property, mortgage number and the names and particulars of all people who can access information on your mortgage.
Also, make a financial statement about your financial status. This should highlight all your monthly income, monthly debts, details of all your bank accounts, expected sale price, costs associated with the sale, commission to be paid to the real estate agent, and any other fees that are applicable.
Draft a hardship letter explaining your financial difficulty and the reason for it. Be honest about your problems, and make sure you request the lender to accept the sale price as it will be less than what you owe on the mortgage.
Also, get copies of the last 2 or 3 months bank statements for all your accounts, copies of the last 2 or 3 months' recent pay stubs, the last two years' tax returns and also W2 forms. Then make a market analysis of the real estate market for your area. Make sure you mention that it is more prudent to sell the property than keeping it given the current market scenario. This analysis can also be done by your realtor if you do not know how to do it.
Then take a copy of the purchase agreement that you have made with the buyer.
All these documents should be compiled and submitted to the Loss Mitigation Department of your lender. Next they will review the documents and then give you an answer whether they are approving or rejecting the short sale.
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