Short Sale Packages

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Here is a general checklist of all of the documents typically required for a short sale file. A fully customizable version of this form, along with a financial worksheet and instructions on how to write a hardship letter are available on the listing training session at the bottom.Some lenders will have their own addenda and financial worksheets that are required with a short sale package. Our Preferred Partner’s bank forms page will have many of them.

1st Lender Loan #:
2nd Lender Loan #:
1. Hardship letter
2. Last 2 Bank Statements
3. Pay stubs (2 most recent)
4. Financial Worksheet
5. Last Year’s W-2′s
6. Tax Return (’07 &
7. Mortgage Statement
8. Borrower Authorization
9. HUD
10. Contract
11. Short Sale Addendum
12. Listing Agreement
13. BPO
Date Packet complete:
Date Packet Sent to lenders:
Write the loan numbers on the top of every page and document you are sending in a short sale package.
Some lenders have their own specific addenda and financial worksheets.  Wells Fargo and ASC have several specific addenda that they require with short sale files.  Many of these are available on the “bank forms” section of the preferred partners site.
Use the above checklist form for every short sale file to insure a complete package is sent. Missing ONE document will delay the short sale process typically by one week.  This is just one more week a buyer has to back out of the transaction. Always respond as quickly as possible when a negotiator asks for any document.
Allow a lender a couple days to process the package and acknowledge receiving it.  You may need to resubmit the package a couple times before it makes it into their system.
Many lenders are getting better at processing short sale files and are attempting to streamline the process. Banks such as Bank of America and GMAC have moved to an automated system through
Partner with a good title company or closing attorney, most are more than happy to help with title work in advance as well as preparing preliminary HUDs.
It is never good to tell a lender they will receive a certain amount, then later ask them they will receive an even lower payoff amount. Don’t leave anything off on a HUD! It is ideal to be able to give a lender MORE than they approved as a payoff, because you always want to overestimate.
Do all pro-rations at least three months out to allow time for processing, approval, and closing. Make sure you include all pro-rations including taxes, insurance, association dues, ecetera.
Because they are preliminary HUDs, buyer costs and estimates are typically unknown this far in advance and are NOT included on it. Closing costs or concessions of any kind should be included as a debit to seller and credit to buyer. Most lenders will allow a concession for buyer closing costs if required.
If you don’t get an estoppel letter for any back condo or association dues in advance, OVERESTIMATE substantially if the borrower is late.  Better safe than sorry!  Many times there will also be attorney fees or late fees when home owners haven’t paid condo or association dues in some time.  Overestimate by 50% in order to have a cushion.  Many times, any additional money can be used for future negotiations, especially if there is a second lien holder.
If you aren’t doing a title search in advance, discuss with homeowner the possibility of ANY other liens such as IRS liens, tax liens, or construction/mechanics liens.
Always make sure the correct parties’ names are all listed on the HUDs, including all lenders, buyer, seller, and the association receiving proceeds.  The purchase and sale agreement should always state the buyer’s and seller’s legal names.
If you are working both sides of the transaction within your office, make sure the commission is NOT shown as going entirely to ONE brokerage company. The lender is likely to assume there is only one agent, and will reduce the commission in many cases.  Commission should ALWAYS be split up on the HUD.  This way, regardless of if there is only one agent or two in your office on the transaction, usually lenders will not negotiate that.
As part of the program homeowners can receive $1,500 back for completing a short sale.  Try to get $1,500 back on the preliminary HUDS.  If anything, it can be used to negotiate later with 2nd position/junior lien holders.  Wachovia has a program offering $2,500-$5,000 to the seller at closing.  These concessions should be included on the HUD as an amount payable to seller.  In a traditional short sale, the net to the seller is $0, especially if it is not a primary residence
As part of , 1st position lien holders will allow up to three percent (3%) of the unpaid principal balance of each subordinate lien in order of priority, not to exceed a total of $3,000.  Unfortunately this is not sufficient for many 2nd position lien holders and WILL be negotiated.  Go ahead and put 10% or so just to try to get the first position lien holder to pay more if needed.  The second position lien holder will accept 10% of their loan balance around 75% of the time.  This will be discussed in greater detail in the negotiations session.
 CLICK HERE for HAFA program breakdown and list of participating vendors.