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Short Sale Training, want to learn Short Sales we can Help.
Short Sale Training
A short sale is the sale of a property at fair market value, when the investor and or insurer agrees to accept the proceeds of the sale in satisfaction of the defaulted mortgage even though it is less than the amount owed.
Generally a short sale should be considered with homeowners whose financial hardships require that they sell their home, but who face problems selling because the value of the property has declined to less than the amount owed on their mortgage. A short sale may be considered at any time prior to foreclosure if the alternative means a lender will incur greater losses through foreclosure and be forced to acquire the property. In order to consider a short sale, a homeowner or real estate professional must submit a signed purchase contract and a HUD 1 settlement statement. Once the purchase and sales agreement is submitted and the other documents needed (financial statement, proof of income (paycheck stubs, bank statements and tax returns), authorization to release and hardship letter) are also submitted the qualification process begins.
Pre-Qualification Process
The pre-qualification program is the time frame usually 90 days but can be extended to 120 days to list the property at fair market value to obtain a purchase and sale agreement. If a contract is received the loan should be submitted for a short sale. The process for the lender is to:
- Analyze the loan package documents to review the financial information to validate the reason for hardship
- Review the appraisal to verify the property meets the investor/insurer guidelines
- Notify borrower/realtor of approval letter that provides minimum property should be listed
- Once a signed purchase and sales agreement is received the negotiations begin.
- If there is no signed purchase and sales agreement after 90 days, should continue to market property but also consider a Deed-in-Lieu of foreclosure.
Short Sale Negotiations
The short sale negotiations begin once an offer is received. A signed contract is received by a potential buyer offering a price and sometimes with contingencies.
The contract is placed into a file with the other supporting documents required:
- Hardship Letter - defining the reason for default and the supporting documents
- 2 Paycheck stubs or P&L (Profit and Loss statement if self employed)
- 2 Bank Statements - most current
- Purchase & Sales Agreement (the offer)
- HUD1 (Settlement Statement)
- LOA (Letter of Authorization) be sure to have a date, seller signature, loan number, borrower name, SSN, property address, and Authorized Party(ies)
The Loan Documents are analyzed to:
- Validate hardship
- determine property value
- determine if seller can contribute to sale
- determine whether the offer is reasonable based on comparable sales and value (if you really low ball you will get a denial letter without consideration)
If everything checks out a call is placed to the Buyer or Buyer Representative
Negotiations begin:
- determine if there is a ready and willing buyer
- determine the investor and their guidelines based on the Pooling and Servicing Agreement
Once determined investor responsibilities and buyer ready to continue if the loan is in foreclosure the foreclosure is placed on hold.
Fill out the form below to receive short sale tips from Influencing a BPO to How to Write a Hardship Letter. Your information is secure will not be shared with any other company.
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