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What Are the Requirements for a Short Sale?

what-are-the-requirements-for-short-sale

Due to the high number of foreclosures in recent years, many banks are now approving short sales of homes whose owners are delinquent on their mortgages. A short sale allows the homeowner to sell the home and put the proceeds of the sale towards the remaining balance of the home loan. If the amount that the house sells for is less than the total amount owed on the loan, the lender will agree to waive the remaining balance or will ask the seller to sign a promissory note for the difference.

The short sale helps homeowners to avoid foreclosure and prevents the lender from having to file extensive paperwork, which can take both time and money that could be spent elsewhere. If you are in a situation where you need to consider a short sale on your home, you need to meet the following requirements to have your short sale approved.

1Hardship Letter

A hardship letter is a document that explains why you are having trouble making your mortgage payments. In your hardship letter, you should include any extenuating circumstances that have contributed to your delinquency like job loss, unexpected medical issues, divorce, or deaths in the family.

2Bank Statements

In order to verify that the monthly mortgage payments are a financial hardship, the bank will also require your last three to four monthly bank statements as part of the paperwork in your request for a short sale on your home.

3Financial Statements

In addition to your previous bank statements, the bank will also require other financial documents to better assess your inability to pay the full value of your loan. You should list your monthly income, expenditures, any stocks that you may own, all assets, savings, and other debts. You will also need to provide pay stubs and W-2 forms from the last fiscal year.

4Listing Agreement

A listing agreement is a written contract that you, the homeowner, make with a real estate agent that specifies a length of time during which the agent will try to sell your home. The bank requires this document so that they know that a licensed real estate agent is working to sell the home as quickly as possible for as high of a price as possible since it will be taking a loss on the property.

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