December 7, 2007
short sale mortgage paperwork
If you owe more than your house is worth and you want to sell and get out from under, you will need to submit a pretty good paperwork package to your lender.
What you want to do is get your lender to agree to a mortgage short sale:
1. You find a buyer at a market price. This is usually lower than what you owe on your mortgage.
2. Your lender approves a short sale.
3. The lender gets the proceeds from the buyer at closing.
4. The lender lets you out of the mortgage.
That's a mortgage short sale. You can't do a short sale if you have a second mortgage though, unless you also get the second mortgage holder to agree to some reduced payoff. It's possible but more difficult. See short sale and second mortgage for more.
Okay, so I want to talk about the short sale mortgage paperwork package you need. Think of it like you are submitting a new mortgage loan application. A "full documentation" loan package. With photos of your house, a hardship letter, a broker's price opinion or BPO, the purchase contract with the buyer you lined up, income and financial documentation, and so forth. It really is like a full-doc loan package except you want the lender to see your situation in a negative light rather than a positive one. That is, you want them to see that you have no chance of paying off the mortgage, bad prospects as far as income go, and no financial means to continue paying.
You always have to stick to the truth but there are ways of bringing out the negative that are entirely truthful and honest.
If you get this right, and you are patient, you can get your lender to agree to your short sale. You may be able to negotiate so you can raise your short sale credit score to raise yours and also get them to agree not to go after you for any of their financial losses.
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4 Comments on short sale mortgage paperwork »
December 7, 2007
Bush Paulson | Home Sale Relief @ 9:21 am (Pingback)
[…] you can play hardball with them, and negotiate short sale mortgage paperwork or deed in lieu of foreclosure. I don't see the sense in living in a house you can't […]
December 11, 2007
Short sale second mortgage — is it possible? @ 11:22 am (Pingback)
[…] out what short sale mortgage paperwork you need, and can the second mortgage foreclose if the first mortgage is […]
December 28, 2007
shelia patteeerson @ 10:16 am:
very good information.
February 4, 2009
Vivian Bailey @ 1:23 pm:
I was widowed two years ago. I have a home that I need to do a short sale on. I do have located a buyer. But I don't know exactly how much they should be offered in a short sale. Appraised for $109,000. The Note is at 90,300. (arrears are 12,380). Through Americas Servicing Company (Wells Fargo Bank). I'm thinking they would accept around $55,000 or 60,000. What sounds like a fair figure to offer? It's a 1986 3/2 brick home in Fort Worth area.
I don't know what's fair. I do know that you are smart to have found a buyer. The key is that the lender won't accept a deal that they think is too low. Get an agent to do a Broker's Price Opinion as low as possible and present this with your short sale package to the lender.
warmly
–Richard