Of course, no bank wants to take a financial loss. Mortgage lenders have set up the short sale process to try to make sure they recoup as much money as possible. Unfortunately, this process takes time, takes a lot of effort, all with no guarantee of success.
The Short Sale Process
The basis of a short sale is that a hardship has occurred and you have not or can not continue to pay the mortgage. A short sale can be better than a foreclosure.
Hardships that banks accept:
- Unemployed / Severely reduced income
- Medical issues that cause economic hardship
- Job transfer out of town
In order to have your short sale approved, the lender will ask that you fill out a short sale packet. Each lender has their own package that they ask you to fill out and return. They will also want many more documents from you as well. But no matter the lender, they need to review from you:
- Letter of authorization (if you hire Shortsalestaff.com or your realtor)
- Preliminary closing statement
- Completed financial statement or Request for Mortgage Assistance (RMA)
- Your hardship letter
- Last 2 years of filed tax returns (if you have not filed tax returns, contact us)
- Last 2 years of W-2’s
- Last 2 months of payroll stubs
- Last 2 months of bank statements
- Comparative market analysis or list of recent comparable sales.
A comparative market analysis (CMA) is usually obtained from your realtor. The lender is trying to get a sense of the current market conditions in and around your home. They want to know that they are getting the best deal they can possibly receive the offer you are presenting to them.
Most of the time, the lender will want to see a complete short sale offer package before they begin to review your short sale. They will need from your short sale realtor:
- The listing agreement (the contract you signed with the realtor)
- Executed purchase offer
- The buyer’s pre-approval letter from their lender, the copy of earnest money check and proof of funds.
- Your short sale package.
Once the Bank Receives Your Complete Short Sale Package
Sometimes the lender may take a while to decide to approve, counter, or reject your short sale offer. If you are going to handle this process yourself, it is imperative that you contact the bank regularly to find out the status and to see if the bank needs anything else from you. Consumers are often surprised at how many calls and updated documents requests they have to make and return.
It will take from 15 to 30 days for the bank the acknowledge the short sale packet. In 3 to 30 days they will assign a short sale negotiator. Sometimes, a second negotiator can be assigned which will add to the time frame. They order a Broker Price Opinion (BPO) to confirm the price of the home and surrounding homes. Once the lender has finished with their due diligence, the send the package to the investor / Pooling Service Agreement (PSA) for review and to accept or reject. The investor / PSA can take 3 to 30 days to review and respond. If all parties approve, then the bank issues the short sale approval letter and you can go to close at the title company.
As you have guessed the short sale process can take some for most people. The time it takes is one of the biggest deterrents for buyers to purchase a home. It is not a quick sale.
Shortsalestaff.com is powered by the J. Gannon Helstowski Law Firm. We have years of experience in dealing with short sales. Because we file lawsuits against most lenders, we do get noticed. Put our expertise to work for you!