Short Sale Process – First Step

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The first step in the short sale process is contacting the lender or lenders. Whether you are looking to negotiate a discounted payoff on your own home or on behalf of someone else, you need to know what the mortgage holders are looking for.

Each lender has slightly different requirements and criteria when considering a short payoff of a mortgage. In addition to having different requirements, a lender’s instructions and guidelines often change. The best way to deal with these changes is by contacting the lender(s) to find out what their short sale requirements are.

The best place to find the contact information for your lender is on your mortgage payment statement. Call the customer service number and ask to talk to someone about their short sale requirements.

When you call in, you will be asked to verify several pieces of information. The is different for each lender, but things such as loan number, social security number (last 4 digits), phone number, property address, name(s) on the account, zip code, etc. Some variation of this information will be required whenever you or anyone else calls the lender.

If you are working on a short sale for someone else, you will need to send in a Third Party Authorization to Release Information. If you are working on a short sale for your property, you may also need to send in this form.

This document allows your lender to talk to and share confidential information concerning your account with whoever you give them permission to. For example, you may need to allow your real estate agent, your lawyer, or loss mitigation specialist to speak with the foreclosing lender.

Some lenders have their own form they want to be used for Authorizations. Otherwise, you can send a hand-written letter or your own form. Key pieces of information that need to be included are: name of borrower(s), social security number(s), property address, loan number, lender, and who the permission is given to. This document should be signed and dated.

More lenders are requiring the authorizations to be for a limited or specific period of time. It various from 3 months to 2 years. In other words, you may have to send in an updated authorization sometime during the short sale process.

Get the fax number to send the Authorization to and who to put it “attention to”. Ask about how long it takes them to get this information into their computer system. Anyone you let communicate with your lender, will not be able to do so, until the authorization appears in the system.

As long as you are on the phone with customer service, you will also want to ask them to send or specify what they need to consider a short sale (a short sale package), payoff amount (what all is owed on the loan to date-this will include principle, interest, late fees, attorney fees, late escrows, etc.) and reinstatement figures (this is the amount it would take to bring the loan current ).

Payoff and reinstatement figures for the foreclosing lender may need to be obtained from the lender’s attorney. You may be able to get the attorney contact information on this call or once authorization is on file. After that, you will have to contact the attorney. Specify the date you want your payoff and reinstatement figures good through, your phone number, your fax number, your name, and homeowner’s name. Be advised, that some lenders and attorneys will only send this information directly to the owners or the property address.

Keep in mind that the customer service representative that you are speaking to may not give out the loss mitigation department’s phone and fax numbers until authorization is on file. You are going to want that information because that is the department that you will be dealing with when you get a buyer/offer for the property. This only applies if you are working on behalf of someone else. If you are calling for your own house, make sure you get the contact information for the department that deals with short sales.

Ask for the name of the department that handles the short sale process. Different lenders calls it different things. Just a few common names or departments that handle short payoffs are: Loss Mitigation, Home Retention, Home Preservation, Default, Collections, Foreclosure, Loss Recovery. To make sure your file gets handled quickly and easily, you will want to make sure you are communicating with the “right” department.

Once you find out which department handles short sale, verify what types of information that department will need to consider a short sale. Again, this can vary from lender to lender, but commonly includes the following:

Financial Worksheet of Borrower(s)

Hardship Letter

Income Verification (Paystubs)

Bank Statements

Tax Returns/4506T

Listing Agreement

Comparative Market Analysis

Purchase Agreement

HUD1 Settlement Statement

In summary, the first thing to do, is contact your lender and find out what their requirements are for a short sale….and who/where to send those items to, once you get them all together.

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Source by Sharon Horne

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