How Can I Get The Bank To Approve My Short Sale

Short Sales ApprovedShort Sale Approvals – What Is Required & Why Would A Bank Agree to a Short Sale

Banks approve short sales are based primarily on “hardships”. It is rare that they will grant a short sale if your mortgage is higher than your home is worth, unless there is a hardship.

Ask anyone who has had a short sale and contacted the bank for help to refinance or modify the loan. The typical answer “we can’t help you – you are current on your mortgage”.

My thinking is if a customer is asking for help and the only way than get help is to  essentially harm themselves (stop paying the mortgage – ruin the credit), that does not make sense. Unfortunately that is the way it is. Modifications and short sales mean you have to default on your mortgage–stop paying for a minimum of 3 months. Now 3 months of non-payment may not seem so bad, but while going through the short sale process you are still not making payments which can add up to nine months or more of no payments. This  just makes your credit worse.

The criteria for consideration as a “hardship”:

  • Unemployment / reduced income
  • Divorce
  • Medical emergency
  • Job transfer out of town
  • Bankruptcy
  • Death
  • Mortgage adjusted & your income can not make the increase in payments

Many of the lenders also require that your home is  listed for a minimum of 3 months before they will even look at your package – even  if you get an offer within 30 days. If you believe you will need to sell you home short due to anyone of the hardships listed above – contact a Realtor and get your home on the market. An experienced real estate agent will know at what price the home needs to be listed to attract buyers.

The banks are backlogged with short sales and foreclosures and even when they get your package it takes time to get a BPO (brokers price opinion) and assign your case to a negotiator. Don’t be surprised if your case gets assigned to multiple negotiators during the process.

Once your file is assigned, the banks will require information from you to document your reason for selling short. Keep in mind whatever price you may accept from a buyer may not be the price the bank agrees to, as they are not willing to take more of a loss than necessary.

Be prepared to gather the following information, have as much of it ready beforehand so as not to delay the process:

  • Letter of authorization, which lets your agent speak to the bank(Real Estate Agent Has The Form)
  • HUD-1 or preliminary net sheet (Real Estate Agent Prepares)
  • Completed financial statement(Seller’s responsibility – most banks provide a form to fill out)
  • Seller’s hardship letter (Write a compelling letter)
  • 2 years of tax returns (Seller’s responsibility)
  • 2 years of W-2s (Seller’s responsibility – are attached to your tax return)
  • Recent payroll stubs (Seller’s responsiblity
  • Last 2 months of bank statements (Seller’s responsibility)
  • Comparative market analysis or list of recent comparable sales (Prepared by Real Estate Agent)

Above be patient.  Be prepared for the bank to ask for the same information more than once. The longer it takes to process the more often they will need the current bank statements and payroll stubs. While your credit will suffer with a short sale it will fair better than a foreclosure. With a short sale you may be able to purchase another home in 2 years, but with a foreclosure it could take up to 5 years to get another mortgage.

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