WHAT IS A SHORT SALE?
A short sale is a workout program that allows the homeowner to sell the home for less than the total amount owed on the mortgage.
Upon final approval, a short sale can help homeowners avoid further collection activity or a foreclosure action.
Documents required to begin:
From the Realtor
- Fully executed listing agreement
From the Homeowner
- Signed and dated financial worksheet listing all monthly expenses and assets.
- Signed and dated hardship letter (why they are unable to pay their mortgage).
- Letter authorizing the Realtor or attorney to access the information on the account.
Short sale approval can take 2-6 months depending on who is handling the file. Not all Short Sales are approved! Once approved, closing must take place within 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 be started over. Realtors are generally allowed a 5% to 6% commission and the bank will pay both the realtor & the attorney handling the sale. 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. The homeowner is not permitted to gain financially from the sale of their home.
It is strongly recommending that the homeowner, Realtor or the attorney notify the bank of their intention to sell their property as soon as the listing agreement is signed. This will allow the bank to complete the property evaluation (BPO) and borrower’s financial worksheet prior to receiving an offer. This significantly reduces the short sale decision time. Once a contract of sale is signed, it must be forwarded to the bank so the negotiations can begin with the bank representative.
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