The short sale process is a fantastic tool to use if your house is upside down. A lot of people are familiar with the definition now because of the housing crisis from 10 years ago despite perhaps only knowing the basics of what it can do for them. They may not be familiar with the intricacies. Like anything in this world, there are some drawbacks. Some people may even favor other options when it comes to the idea of losing your home. However, the short sale is still a fantastic way to go, and we’re going to talk about the complexities of the process.
The one significant drawback of using a short sale is that the process can be quite lengthy. It requires gathering together a lot of information for the bank, but in the end, the benefits are worth it. The advantage of going through the entire short sale process is the bank recognizes you’re making an effort to work with them. The efforts displayed on your end is beneficial for everybody involved because the bank does not want to be in the homeownership industry but instead, the lending industry. So, in the end, the bank can offer debt relief wiping your slate clean and allowing you to walk away. You’d first want to determine the worth of your home.
Working with the bank will mean providing them information regarding the hardship you’re dealing with and why you’re unable to make your mortgage payments. Also, you must meet the condition of owing more on the house than what the house is worth. Only under these circumstances will the bank even consider the short sale application. The banks perspective is they would prefer to work with you in this challenging time, instead of dealing with a foreclosure situation where their outcome would be less predictable.
The short sale process can take a lot of time. For this reason, you’ll want to provide your information in a simple but clear package. The package should include these nine things:
1) The first thing the bank should find in this folder will be the hardship letter. This letter will incorporate all the details your facing and will describe the circumstances surrounding your situation. You will want to be truthful without embellishing anything in this letter. It should be highlighting all the facts and have proof backing everything that stated.
2) The second item in your folder should be two years worth of your W-2s.
3)You will also want to include two months worth of banking statements. Of course, the bank has access to these, but it’s still better to add them in attempting to make the process go smoother. The more organized and professional the package, the less likely they will have cause to reject it.
4) The four thing you want to have in your file folder is a copy of your personal financial statements.
5) To backup precisely what’s your earning it’s best to include four weeks worth of pay stubs. Again the bank will have access to these, but it’s better if you have them easily accessible.
6)You will want to include a letter of authorization for the agent that’s handling the sale so that they can communicate openly with the bank. Staple their business card to the top of the letter within the file and keep it easily accessible. Banks are notorious for losing information which could delay things even further.
7) Be sure to include two years worth of tax returns. The bank will process your file to multiple departments, and it’s best to have this information available to them.
8) Include a preliminary closing statement supported by your agent and your buyer. This letter will give confidence to your bank that you have done your homework.
9) Included in the package a comparable Market listing indicating you have done your homework and you know what the fair market value is within the area. This form will provide contrast if the bank attempts to come up with their own numbers.
Once you have submitted your package, you will want to have the buyer agent write a small sales offer. If the bank understands somebody is available and ready to purchase the property they are more likely to stamp it and go ahead with the deal. Once you have submitted your package, you will want to have the buyer agent write a small sales offer. if the bank understands somebody is available and ready to purchase the property they are very likely to stamp it and go ahead with the deal.
Now, you’ve done everything in your power on your end. The rest is in the bank’s hands. They will acknowledge they’ve received the file and that can take up to a month. Following that, the bank will initiate the internal process which could take up to four months. The operations are slow but include dealing with the original underwriters of the initial mortgage. There is a lot of assessment involved when HOA fee’s are involved and they may bring on a second negotiator to assist them. They will likely review the original pooling and servicing agreement and also have a broker price opinion analysis done. A lot of this information will be kept confidential within the bank causing a lot of delays and frustration for everybody involved.
To conclude the short sale is a fantastic opportunity for some people, it’s an emotionally trying time for everybody but especially for the people in a position of having to sell their home. The bank is in control of everything which makes it all the more difficult. Having an experienced team working with you through this process is a valuable asset.