A short sale package is a proposal to buy a home facing foreclosure for less than the payment amount. It includes supporting documents and can help avoid the expense and negative publicity of foreclosure. The lender specifies the minimum elements, including a hardship letter and additional documents to demonstrate the owner’s needs. The package can also include documents supporting a lower value for the home and a real estate agent’s summaries.
A short sale package refers to a proposal made to a lender that includes an offer to buy a home that is facing foreclosure. The term comes from the fact that the offer is less than the payment amount and is a shortage for the lender. In a short sale, a proposal package contains several fixtures and a variety of supporting documents.
Short sales are an alternative route to foreclosure, a forced return of a property to the lender due to non-payment. Foreclosures are serious problems for the homeowner, the lender and the community. To mitigate such potential multiple losses, the lender will consider receiving a less than full payment in exchange for avoiding the expense and negative publicity of a foreclosure and the continued loss of time and money due to the expense of the non-producing asset.
The lender specifies the minimum elements of a short sale package. Usually there are one or more cover letters for the package. These can be a letter of authorization, which allows a third party to negotiate on behalf of the borrower, a cover letter that outlines the contents of the package offer, and most commonly, a hardship letter from the borrower indicating the need for a sale. short and the reasons why The owner cannot make the payments.
The short sale package will support the hardship letter by including bank statements, pay stubs, tax returns, and other documents to demonstrate the owner’s needs. Other requirements may include W-2 borrowers, utility bills, and character references. Canceled checks or stamped receipts provide proof of payment of utility bills and may be acceptable to the lender to show that the borrower resides in the home.
The additional documents can help the lender evaluate the available options and costs. Depending on the lender, an appraisal or a broker’s price opinion will help establish the home’s value in current and market conditions. All inspections carried out in the house must be included. A contractor’s bid sheet will justify the costs necessary to bring the home up to neighborhood codes and standards.
The borrower can add additional documents supporting a lower value for the home and claim that the lender will be in a worse position if the home is pursued foreclosure. Documents added to the short sale package could include code violation citations for the property, a sheriff’s department report detailing nearby sex offender residences, or the presence of environmental or objectionable elements, such as a nearby industrial plant or a busy road. The owner will also want to include a statement of latent defects or problems with the home that only the owner knows about and is required to disclose.
The real estate agent will provide the listing contract and summaries of recent houses of the same type and close proximity to the house under consideration. The agent will usually include an executed copy of the short sale offer and settlement documents. A copy of the payment request letter to the lender and the lender’s response are included. An orderly presentation of the short sale package can facilitate a more positive response from the lender and should help everyone involved understand the procedures.
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