The Short Sale Package
It has been said many times before, but really cannot be emphasized enough: loss mitigation workers (aka ShortSale workers) are very busy, and will not waste their time on incomplete files. For example, let's say that you are working a ShortSale on a property. You think you have everything you need; you've already aquired a Purchase Contract, & have contacted the Bank. The Seller has verified their ShortSale wishes, and have supplied you with 30+ pages of financial information. The only thing missing is a hardship letter. In this scenario, the ShortSale cannot proceed. There may already be a Phase 1 worker assigned, but they cannot forward or work the file until absolutely ALL required documentation has been received. Therefore, it's crucial to know exactly what is needed to keep the ShortSale moving, and to minimize Bank review time.
Even though most Banks are different, and will require different things for the ShortSale review, there are a few pieces of Seller information that everyone will ask for. Most important of these are the Homeowner's financials (pay stubs, bank statements, tax returns). Some lenders may require the financial statement or "authorization to release information" to be on their specific letterhead, or require specific information to be included on certain documents, but the Banks will always need current financials. Make sure that you always have the most recent financials from the Homeowner, by having them forward stubs & statements as they arrive. It has happened too many times in our business; when we think the Bank has everything they need to make a decision. Lo and behold though, our worker will end up requesting the 2 most recent months of pay stubs & bank statements, which burns valuable time as you run around assembling. Even though the Homeowner's income & expenses stay exactly the same, the Bank worker needs to present a completely current file to their Investor. If the Homeowner is not prepared for this request by keeping a copy of all their financials, you risk the ShortSale file being closed! Banks & their workers are very busy, and typically will not hold an incomplete file open for more than a few days. Generally speaking, if a Bank requests updated pay stubs on Monday, then you have until Friday to supply them. If you don't comply, the Bank will waste no time in closing the file, forcing you to start ALL OVER.
A typical Short Sale package will contain the following items/documents:
--Authorization to Release Information
--Hardship Letter
--Financial Statement
--Pay Stubs
--Bank Statements
--Tax Returns
--Junior Lien/Mortgage payoff statement
--Listing Contract
--Purchase Contract (including Buyer's Proof of Funds)
--HUD1 Settlement Sheet
A few of the above items can be substituted or waived (ie 4506T in lieu of Tax Returns), but everything must be properly documented. If the Homeowner receives child support, then you will need to supply the payment stubs proving it, and so on. Regardless, there's no way around the need for current & up-to-date financials. Especially that everyone needs them, & when such a minor issue can kill your deal (wasting months), it is 100% unacceptable to not be prepared for this inevitable request.
