Short Sales

When the proceeds from the sale of a home fall short of the amount owed to the lender, that transaction is called a short sale. A short sale is a unique transaction, so Buyer’s Title has developed our Short Sale Assistance Program.

The goal of the Short Sale Assistance Program (SSAP) is to facilitate the transaction process with all of the parties involved. Buyer’s Title will make the process quicker and more efficient by handling the transaction from beginning to end.

The tasks of the Short Sale Assistance Program include:

• Meet with the seller for an initial consultation to explain the short sale process.
• Interview the seller and listing agent to obtain all of the pertinent information that is necessary to determine if the seller is eligible for a short sale.
• Obtain a title search to assess all of the title issues such as additional liens and pending foreclosures.
• Contact the sellers’ lender(s) to obtain specific requirements and evaluate foreclosure status.
• Work with the seller to gather necessary documents required by the lender for short sale approval.
• Prepare and/or assist the seller in preparing documentation for the lender such as hardship letters, monthly cash flow statements, HUD-1’s, etc.
• Presentation of the contracts/offers to the lender(s).
• Assist in the negotiation of terms between multiple lenders to facilitate the closing.
• Provide the seller with documentation of the transaction and release from the mortgage debt.

Why Real Estate Agents Should Use the SSAP

Buyer’s Title believes there are many reasons real estate agents should use the Short Sale Assistance Program for these special and complicated transaction. The SSAP can:

• Increase the showings on your listing. When selling agents see that the seller is enrolled in the SSAP they know that although it is a short sale, it won’t be starting from scratch, and the process has already been shortened.
• Take the responsibility off of the agent for monitoring the foreclosure and guessing at other title issues pending.
• Absolve the agent from the responsibility of all of the clerical and follow-up work with the seller regarding their financial information and presentation to the lender(s).
• Decrease the agent’s personal expenses of phone calls, faxes, copies, mailings, etc. associated with communicating with the lender(s).
• Help agents manage their time better. The agent’s time can be spent selling houses.

SSAP Information for Sellers

When lenders agree to do a short sale, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose. Why would a lender permit this? First, you should understand that not all lenders would allow a short sale. Their decision depends on a number of factors: Where is your house? How much loss will the lender suffer? What is the possibility that a speculator/investor will buy at a foreclosure sale?

Lenders have their own requirements. Buyer’s Title can only provide general information, and through consultation with your lender we will determine what specifically they need in order to move forward with the short sale process.

If you are in financial trouble or if you have already missed some payments, your lender may already have reported this information to the credit reporting companies. We will try to convince the lender not to report any more delinquencies, but unfortunately, that’s in your lender’s sole discretion.

If there is a first and second mortgage or a home equity line of credit, approval from both lenders will have to be obtained.

You will have to sign a letter of authorization in order for the SSAP to speak to the lender on your behalf. The Privacy Laws enacted after 9-11 prohibit lenders from discussing personal and financial information with a stranger without such written authorization. This letter will include your name, property address and loan number.

A comprehensive letter explaining why you are requesting the short sale will be written, often called a hardship letter. It will be submitted with all of the additional documentation the lender requires.

But the lender’s approval to proceed with a short sale does not end the process. When you or your real estate agent find a prospective purchaser, the contract must state that it is contingent on lender’s approval. The contract will be sent to the lender(s) with a HUD-1, which is an accounting of all expenses that you would have to pay at settlement, and a final number that the lender will receive when settlement takes place.