Sue Saunders, NVAR General Counsel
Representing a client in a short sale will require negotiating with the lender (or lenders if there is a first and second mortgage on the home) to accept a payoff less than the balance due on the loan.
Representing a client in a short sale will require negotiating with the lender (or lenders if there is a first and second mortgage on the home) to accept a payoff less than the balance due on the loan.
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Get the sellers to send a brief letter to all mortgage holders, giving them permission to speak with you. Otherwise, privacy laws will prevent them from talking to you about the loans.
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Ask for details of the loan by sending a loan information request letter signed by all sellers.
Finding the decision maker is one of the biggest initial challenges for the short sale agent.
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Be sure you contact the lender’s (bank’s) loss mitigation department, which will be the group to decide whether to accept a short sale, rather than the collection or customer service department, which is only interested in recouping past due loan payments.
Before the mortgage lenders will consider a short sale, they need to know financial information about the seller and why the seller cannot pay the loan. The seller will need to submit information to the lender to assist the lender in deciding whether to accept a short sale.
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The seller should submit a package which includes:
• W-2 forms from employers (or a letter explaining the seller is unemployed)
• bank statements
• two years of tax returns
• other financial documents with income and debt obligations
The sellers should also submit a “hardship letter”, explaining the circumstances that make it impossible for them to pay the full amount of the loan. The sellers must show true financial hardship before the lender will agree to a short sale.
The bank will also need comps or a broker’s price opinion showing your estimate of value.
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Most lenders will want a broker’s price opinion or even an appraisal before you and the sellers set a price. Offer the lender comps of recent sales. When the lenders agree to accept a short sale, be sure to get the consent in writing. Once the agent and seller have made an agreement with the lender(s), the agent is ready to enter into a listing agreement with the seller and begin marketing the property.
Statements made by the NVAR Information Line attorneys on the telephone, in e-mails, or in legal e-news articles are for informational purposes only. NVAR’s staff attorneys provide general legal information, not legal representation or advice regarding your real estate related questions. No attorney-client relationship is created by your use of the Legal Information Line and any information you receive You should not act upon this information without seeking independent legal counsel. Information given over the Legal Information Line or in these articles is for your benefit only. Do not practice law! Inform your clients they must seek their own legal advice.
