This is the Short Sale Process Checklist. I know it looks just like the Mortgage Modification checklist. However, it requires the same documents plus around six additional documents. You will find a list of those additional documents at the bottom of this article.
Unfortunately, many short sales are denied because they are not complete. In addition, they take a long time to process, they are commonly lost by the mortgage servicer, and they require a lot of work. If you file an answer to your foreclosure, or file bankruptcy and want to consider a short sale, the application goes through a special paralegal at the office of the attorney for the bank.
First, keep in mind that every lender has different rules. However, the following are the specific documents for which CitiMortgage and most other lenders often ask.
Short Sale Process Checklist
- Dodd-Frank Certification Form. This form requires you to swear that you have not been convicted of fraud, tax evasion, or money laundering so you can ask for help from people that are guilty of it. I am not kidding you.
- Hardship Affidavit
- Two consecutive current bank statements for all borrowers. Must be hard copy. No online documents.
- 2019 Tax Returns with all pages and all schedules.
- Current pay stubs covering a 30-day pay cycle for all borrowers. They cannot be older than 45 days.
- Updated Work Out package application.
- Form 710 Uniform Borrower Assistance Form.
- Signed and dated Hardship Letter that details the hardship.
- 3rd Party Authorization Form from the client. This form varies from lender to lender so, you must get it from your lender. Its use is in identifying any parties or companies that have the authorization to speak with the lender. You must be sure to sign and date it.
- IRS form 4506T for 2018 & 2019.
- Your current utility bill.
- A current property tax bill.
- Your current hazard insurance declaration page.
- If rental property, you must provide a current lease agreement along with 3-months of bank statements listing rental income.
- If there is a homeowners association that is paid on the property, you must provide a current association statement with the frequency and amount of payments.
Alternative Income
This includes documentation for items such as self-employment, social security, pension, and child support. Self-employment requires a current quarter year-to-date profit and loss statement that shows the following:
- Business name or borrower name
- Total income earned
- Total business expenses
- The 1120s with three months of bank statements, if available
Social Security Income
Proof of social security income requires a current 2020 letter from the Social Security Administration listing the total amount of the payments received.
Retirement Income
Proof for retirement income requires a current payment statement covering a 30-day pay cycle with year-to-date earnings and monthly payment. If there is a divorce, you must provide a final divorce decree. This decree must also include a disclosure of who is awarded property along with recorded Quick Claim.
Additional Items Required for a Short Sale
If the homeowner is seeking a short sale please provide the following in addition to the above core package:
- Current Listing Agreement
- Updated Purchase Contract
- The contract must be signed by both parties
- Needs to show is contingent on investor approval for a short sale
- Updated HUD-1 with settlement date out to 45 days
- Needs to include buyer and seller information
- Needs to show proposed payoffs for all liens on the property
Resources for Foreclosures
Where to Report Foreclosure Scams
Federal Trade Commission (FTC) for foreclosure scams.
Trustee Regions and Offices for foreclosure scams that involve bankruptcy
Other Related Information
Senior Citizens Social Security Student Loan Garnishments
Learn About Louisville Short Sales
How to Keep Your Property When Filing Bankruptcy in Kentucky
If you have a foreclosure see us about your defenses. I handled many of these cases for over 30 years. In addition, I am happy to talk to you about your options. Nick C. Thompson, Attorney: 502-625-0905
