What is a short sale?
A short sale is a work-out program that allows the customer to sell the home for less than the total amount owed. Upon final approval, a short sale can help homeowners avoid further collection activity or foreclosure action.
Documents required to begin an application
From the REALTOR
• Fully executed listing agreement From the Homeowner
• Signed and dated financial worksheet listing all monthly expenses.
• Signed and dated hardship letter (why they are unable to pay the mortgage).
• Letter authorizing the REALTOR access to information on the account. It must be dated and include the last 4 digits of the borrower’s Social Security Number, their signature, the full account number and the property address.
Additional information
• Short sale approval is good for 30 days. If closing does not occur within 30 days, the entire short sale package may need to be resubmitted with updated information, or the approval process may need to start over.
• REALTOR or homeowner inquiries should be directed to the negotiator assigned to the file, whose information will be communicated during the introduction call.
• REALTORS are generally allowed 5% to 6% commission based on investor rules. If dual agency applies, maximum commission is 5%. Some investors operate on a reduced commission structure and the actual commission schedule can be confirmed during the introduction call.
• This must be an “arms-length” transaction. The property may not be sold to anyone the seller has a close personal or business relationship with including family, friends or neighbors.
• During the introduction call the following will be addressed:
- Commissions
- Fees and costs
- Pricing of the property
- Timeline
• In order to reduce the 25 day response time the liquidation team is strongly recommending that the homeowner and/or REALTOR notify the Mortgage Provider of their intention to sell their property as soon as the listing contract is signed. This will allow them to complete the property valuation and borrower financial evaluation prior to receiving an offer. This significantly reduces the short sale decision time on a submitted offer.
• In some cases investors and/or PMI companies require the mortgagers to sign an unsecured note for some or all of the difference between the net proceeds from the sale and the total amount due. This is communicated as part of the response on a short sale offer.
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