Clarksville, TN

Short Sales - The Closing

Steps to Close

1. The Agent/Title company recieves the approval/demand letter. The Agent must forward it to the Title company in most cases. Demand letters or release letters must be submitted for all loans.
2. Title company works up the settlement statement exactly as stated on the approval letter. None of the numbers can be changed at this point.
3. Line 603 must net ZERO woth NO money to the seller. The demand letter must be revised in order to change the figures on the HUD-1.
4. The HUD-1 is faxed back to the lender(s) to review and approve. The second lien holder who has issued a release must also be sent the final HUD-1 to review and approve ( This is in BIG BOLD PRINT on every letter.
5. ONLY after the lender(s) has approved the final HUD-1 are you authorized to close !

Reminder:

The foreclosure process will continue while the property is listed and even during negotiations of a short sale. Please ask for a postponement of the foreclosure sale if a legitimate offer is pending. Do not assume the negotiator is aware of the pending foreclosure sale.

Short Sales - Submitting The Offer

Here is a list of what you are going to need when submitting the Short Sale Offer

1. Signed Offer - Buyer(s) & Seller(s)
2. Estimated HUD-1
3. Buyers Qualification Letter
4. Short Sale Package

• 2 Years signed tax returns
• 2 Months bank statements
• 2 Most recent pay check stubs
• Financial Statement
• Hardship Letter
• Signed Authorization Form

For a Short Sale Approval

1. You need to demonstrate to the servicer that it makes sense to approve the sale
2. You provide the documents needed to justify their decision
3. Have pictures and comps
4. Make the lender aware of your marketing( your efforts and pricing history )

Why so long for a answer ?

1. Lender needs to verify the value of the property
2. Order the appraisal
3. order BPO -this could take a couple weeks pending on where this file is in the stack
4. Lender needs to get approval - Based on how big the discount would be

Short Sales - Negotiating The Sale

Who will Negotiate the Sale ?

The listing agent and the home owner will negotiate the offers to get the BEST and HIGHEST possible offer.

Always present ALL offers to the seller and REJECT and or COUNTER Unresonable offers.

Have the Home owner to Accept the Best and Highest offer subject to the lenders approval of a Short Sale.

The lender don't want you to send in all offers for them to negotiate. You will only send then the BEST and HIGHEST offer for Short Sale approval. Keep in mind that this can take 45-90 days to get the approval. The lender has to weigh the value of a Short Sale ~VS~ Foreclosure. There are many steps to the process.

You will need a completed HUD-1 that must reflect the offer being submitted to the lender with the following information:

1. Dates
2. Fees
3. Names

Remember these tips

1. Do NOT add any fees that are not normally paid
2. Seller may NOT recieve any proceeds from the Short Sale

These fees will generally NOT be paid on a Short Sale

• Home warranty
• Repairs - Short Sales are sold "AS-IS"
• Inspection Fees
• Fees normally paid to Buyers including Tax service fees
• Surveys
• Junk Fees
• Utilities
• Buyer Closing Cost over 3% of sales price

Fees they will concider paying

• Property Tax
• Owners Policy
• County Doc. / Transfer Tax (if applicable )
• Escrow Fees
• Commissions - May be reduced
• Junior Lien Holders - these must be negotiated and show amount offered for release of the Junior Lien Holder. ( Junior Lien Holder would be like the 2nd Mortgage )

Junior Lien Holders may accept $1,000 - $3,000 ( Example ) to release the property but not forgive the debt.

* You ask why they may do this.

1. Better than getting nothing at all.
2. Professional Courtsey

Short Sales - Savings to the Lender

Why would the lender want to do a short sale instead of foreclosing on the property ?

Here is a example why the Short Sale would be better for the lender.

Short Sale Senario Foreclosure Senario

$110,000 Actual Loan Amount $110,000 Actual Loan Amount

$100,000 Actual Market value $100,000 Actual Market Value

$8,000 Commission and Closing Cost $1,500 Legal Fees

$92,000 Amount left to Satisfy the lender $4,500 Lost Interest

($18,000) Amount the Lender would discount the Mortgage $3,000 Taxes, Insurance, Maintanece & Utilities

$8,000 Commissions and Closing Cost

$83,000 Amount left to Satisfy the lender

($27,000) Loss to the Lender

By doing the Short Sale the Lender SAVINGS are $9,000

It can take 9 Months for a Foreclosure and Real Sale of the home

By the lender allowing the resale it also is a benefit to the borrower as they do not have a foreclosure on the credit and the do not have there name posted in the local news paper.

Short Sales - Requirements

The Home Owner Qualifies for a Short Sale with a Short Sale Package.

Here are the required items for a Short Sale

1. 2 years Tax Returns ( Signed )
2. 2 Most recent pay check stubs with YTD
3. Financial Statement
4. 2 Months Bank statements with bank logo
5. Hardship Letter

* A hardship letter is a pitty letter to the lender. This is not a noval.... the letter needs to tell their story to the lender. It needs to be more than " I lost my job " It needs to tell how it has affected the family.

* No Tax returns: Blank paper write Tax returns as the top and explain why they don't have a tax return

* No pay stubs: Blank paper write Pay Stubs on to and explain why they dont have any.. like.. They lost their job. If they have Unemployment or Social Security, get a copy of this to turn in.

* No income, Social Security ect. Find out who is making their payment the payment for groceries, utilities ect.

* No banks statements because the took all money out and closed the account because they were trying to stay afloat.

This is a list of items needed to do a short sale * Other items could be added to the list from your lender