For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is a short sale. At Westchase Title, LLC we conduct short sales to help you keep your home or business.
If you are considering buying a short sale, we suggest that all borrowers obtain legal advice from a competent title company or real estate lawyer. Westchase Law, P.A. can be retained to perform your short sale and work in conjunction with Westchase Title, LLC to perform your closing
1. Call the lender. You may need to make many phone calls before you find the person responsible for handling short sales. You do not want to talk to the “real estate short sale” or “work out” department. You want the supervisor’s name, the name of the individual capable of making a decision.
2. Submit a letter of authorization. Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:
3. Preliminary net sheet. This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. We will prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.
4. Hardship letter. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or run over by a truck, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
5. Proof of income and assets. It is best to be truthful about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash, real estate, or anything else of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
6. Copies of bank statements. If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it’s probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
7. Comparative market analysis. Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). We can prepare a CMA for you, which will show prices of similar homes:
8. Purchase agreement and listing agreement. When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.
If everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request. Credit report status is not always negotiable.
A reputable title company or an attorney should be part of the closing process, as the purchase or sale of a home or other real estate is often the largest transaction a person will undertake during his or her lifetime. A prospective home buyer or seller should take all precautions possible to make sure that the deal concludes smoothly and correctly.
Call Westchase Title, LLC at 813-490-5212 or contact us online to schedule an appointment.