for a workout or short sale
Most lenders will require the following documents as the minimum for considering a loan workout or a short sale, and many lenders will not consider a workout until the loan has been delinquent for at least 90 days. This is why it is important for the homeowner to contact his or her lender to find out the particular guidelines that their lender uses.
Hardship Letter
This letter describes the hardship that caused the loan to go into default and describes your preferred solution to bring the loan current. The hardship should be involuntary, such as divorce, job layoff or medical reasons. This letter will also include your proposal for a workout or short sale and the reason you are confident the workout plan will succeed or that the short sale can take place in the current market. This should be a hand written letter. We can help with this.
Pay stubs
One or two current pay stubs from each person occupying the property who is contributing to the payment of household expenses. The lender will use this to determine the feasibility of any repayment plan, or whether to determine foreclosure is inevitable without a short sale.
Tax Returns
If the homeowner is self-employed, these types of borrowers will need to provide the last two years tax returns along with a current profit and loss statement. Many self employed borrowers don't receive pay stubs, the lender will use the tax returns to determine income
Financial Statement
The lender will ask for a financial statement outlining all of your income, assets and liabilities. This statement provides a "snapshot" of your financial situation allowing the lender to determine how the economic hardship can be overcome. In addition, many lenders also ask for a monthly expenses worksheet this includes other debt obligations such as credit card payments, utilities, food, etc. Make sure that as a homeowner you make a diligent effort to give an accurate estimate of your monthly expenses. It would also be advisable to begin to cut some of your discretionary expenses in your monthly budget.
Be organized and keep it updated
The more organized the homeowner is in this process, the better the homeowner will be able to handle the myriad of questions that he or she will have to undergo with the lender. One key thing to remember if the homeowner is attempting to complete a workout without outside assistance is to submit ALL of their paperwork together as a package. Be sure to keep copies of everything and document when they were sent. As time passes, it is a good idea to update the package with new pay stubs or other applicable paperwork, i.e. A new Income Tax return. For a more complete list of items that may be needed for a short sale package, click here.
Listing documents for the house
The house needs to be listed on the local Multi-list service. I can get all of that paperwork ready for you to sign. We’ll list it at your break-even price and work out the short sale price with the bank later.
Letter designating Paul Galiszewski as your negotiating agent
In order for us to negotiate on your behalf with the bank, the bank has to recognize us on your behalf. We will supply you that letter and get it to the right people in your bank.
Make notes on all calls
In addition, a homeowner should keep a notebook to record or summarize any and all conversations or documents sent to anyone that he or she discusses or
communicates with regarding the loan. This information can later be helpful in the event that there are any miscommunications and/or a homeowner may need to hire a lawyer.
The homeowner's lender needs all of the above information to be able to determine which type of workout may be appropriate, or if a short sale is the best course of action. Once that is determined, the lender will communicate with the homeowner what their options may be and what will be the next steps a homeowner will need to address or act on. While this financial assessment process may be grueling to the homeowner, a realistic assessment of the situation may enable the homeowner to find a solution he or she might not have believed was previously available.