Short Sale Information
Are you considering buying or selling a short sale property. We can provide assistance and answers to your short sale questions:
Potomac Settlement Services
7250 Heritage Village Plaza
Gainesville, VA 20155
Tel: (703) 257-1884
Fax: (571) 248-4436
206 S. Cameron Street
Winchester, VA 22601
4311 Ridgewood Center Drive
Woodbridge, VA 22192
Providing real estate settlement services and title insurance throughout Maryland and Northern Virginia, including Gainesville, Haymarket, Woodbridge, Manassas, Fairfax, as well as Warrenton and Winchester, VA.
The Short Sale Process
The first and most prudent step is to seek the assistance of a competent real estate lawyer to assist in the process. While each lender has their own specific requirements there is a consistency in the nature and type of documentation that can be expected.
The first step is to contact the lender to see if they have a person or department set up to respond to inquiries regarding short sales. While the situation seems to be improving as lenders become more and more organized in dealing with short sales it still may require some persistence in getting the proper individual on the phone to ascertain the lender's procedure.
Once contact is made with the short sale department typically a lender will want an authorization signed by the borrower(s) which would allow the real estate attorney to communicate directly with the lender regarding the potential short sale. Many lenders will merely accept a letter, others will require a signed authorization and still others will require their specific written authorization form to be signed.
Once proper contact and authorization is in place the following requirements can be expected from your lender:
This is a written statement which describes for the lender what has changed making it difficult/impossible for the homeowners to continue paying their current mortgage. Specifically, this is the statement where it is outlined for the lender if the homeowner(s) has lost a job or had a significant decrease in income, was hospitalized or had some other unexpected illness or medical emergency contributing to their problems, or simply had their mortgage adjust up making the payments no longer affordable. Again, your real estate attorney should assist you in writing this letter making a strong plea to your lender to accept less than the full payoff.
Statement of Income/Assets
Most lenders will require a financial statement outlining all liquid assets, including savings accounts, checking accounts, money market accounts, stocks, bonds, cash and other real estate. Obviously this statement needs to be consistent with the facts outlined in the hardship statement in order for a lender to seriously consider the request. In many cases the borrower should be prepared to provide backup information including bank and other statements for the accounts disclosed in your statement of income and assets.
Appraisal/Comparative Market Analysis
As part of the short sale process most lenders will require either that an appraisal be performed confirming the value of the property or in the alternative a current market analysis obtained from a real estate agent which will compare the suggested price of the home to that of similar homes that are either currently on the market for sale or have recently sold.
Listing Agreement and Purchase Agreement
Many lenders also require a copy of a Listing Agreement with a real estate brokerage for the sale of the property together with a copy of the Purchase Agreement for the sale of the property as part of the short sale package. Obviously, any such Purchase Agreement should be carefully worded to include language that the sellers' obligations are expressly contingent upon lender approval. The lender may also require a preliminary settlement statement or net sheet which includes estimated closing costs and reflects the bottom line payoff to the lender.
In most circumstances after a complete short sale package is received by the lender it will take 30-60 days for approval and if granted, sellers may move forward and close the sale of the house to the prospective purchaser.
Kate Polizzi is a Virginia attorney with experience negotiating successful short sales with banks and mortgage lenders. Let Kate work on your behalf to negotiate the short sale of your property.
Contact Kate Polizzi today at (703) 656-2171 for a free consultation.