Archive for November 2011
How to Write a Short Sale Hardship Letter: A Guide for Agents
November 25, 2011 | 
Author
The short sale hardship letter could be the deciding factor of whether or not a lender will allow a short sale. While the homeowner is ultimately responsible for this step, as a real estate agent the more you know and share, the more likely you can help them.
Start by planning out what you will say in the short sale hardship letter. Write a list of every idea you and your client can come up with about why they can’t afford to make the house payments. Be specific and thorough about why you are having financial difficulties. Maybe there was a recent job loss. Perhaps medical bills or increased property taxes have hit them hard. Divorce, credit card debt, and to a lesser extent, a child’s college tuition can all be pieces of the puzzle they will have to assemble and present to the lender.
This step should be like brainstorming. Don’t think too much; just write whatever comes to mind. They might not be the actual reasons for the hardship, but you need to get the juices flowing.
Next look at your client’s short sale hardship letter ideas and pick the most obvious and serious reasons that affect their financial situation. Try to think like the lender. They see hundreds of these a week. What would they consider truly crucial, and overwhelmingly detrimental? A combination of lowered income (death, layoffs, disability) and raised, unavoidable expenses (like medical bills) are probably your best bet.
When putting together the actual short sale hardship letter, the number one rule is to keep it under a page in length and in paragraph form. The letter will not get the attention it deserves if it is too long or difficult to scan easily.
Make the short sale hardship letter as business like as possible. That means business format for the address and date. The RE: line should read “RE: Request for short sale – (Your loan # and property address).” Address the letter “Dear (Bank’s name) Representative.”
In the first paragraph of the short sale hardship letter have your client address the changes that have happened that makes them no longer able to afford the payments. In the second paragraph state why the area is bad. List increased taxes, declining property values, and any foreclosures on your street.
The third and fourth paragraphs should list the following with as much detail as the client can manage: wrongdoing by mortgage loan broker, bad adjustable mortgage loan on the property, hardships (from your original list).
In the final paragraph of the short sale hardship letter, have the client clearly state that they “Cannot Pay” and need to short sale the home. Leave no other options available. Include the client’s contact info and the agent’s contact info for “further information,” sign and date the letter and hand it to the attorney or lender in person.
Posted in 
Tags: 
Understanding the Procedure of Short Sale
The short sale procedure still puzzles a lot of people, even if it was practice by many homeowners for several years now. Even agents are confused about the method. Some of them don’t even know how to explain to their clients the reason why they need to short sell their most treasured property.
Other agents don’t even know that banks act as lender in this kind of method and some don’t know short selling exists because of two things; Hardship and the seller owes more on the mortgage than the true value of the home. But what are the procedures of this method?
Check them out below;
1. Find a good realtor who can help you out with your deal – Finding the best realtor will definitely help boost your chances of qualifying for this method. They will let you figure out how you can qualify for it and will explain to you the primary reason(s) of a homeowner before they can short sale their properties.
2. Prepare an authorization letter that will be used by your realtor in all bank transactions – You will indicate in the letter that you are allowing your realtor to do all real estate transactions (including short selling) for you.
3. Make a seller’s hardship letter – Prepare a letter that says you are broke and can’t pay of your loan mortgage anymore. As what I have said above, being broke helps you qualify for this method.
4. Have a photocopy of your financial statement / Tax returns / Payroll stub – Banks will verify if what you have written in your hardship letter is accurate through your financial statement, tax returns and payroll stub.
5. Let your realtor do the talking – When you have completed everything, you may give all the documents to your realtor. Your realtor will be your mouth and even your ear until the end of the deal so just let him do his or her job and don’t be a bother, they know the real estate industry more than you do so just relax and trust your realtor all the way!
Additional Short Sale Tips
1. Don’t forget to hire a realtor – Always remember to hire a reputable realtor if you want to have a smooth sailing transaction. Ask friends and family members, perhaps some of them know a trusted realtor who can help you out. You can’t expect a great outcome on your transaction without a professional who can assist you.
2. Patience is a virtue – Processing of this method takes very long before they let your property undergo through it. But be patient and let your realtor do his job without destructing him or her, it is recommended to stay away from your realtor so he or she can concentrate freely on his job.
3. Make the most out of your time by enjoying your property while you are still the owner – While you are waiting for the result of this method, you may enjoy the last moments you will be in your most treasured home. Allow yourself to savor that wonderful moment until the very end.
What Is The Short Sale Process?
First, I must share with you a disclaimer. Anything you do with your house can have serious financial, tax, and legal implications. If you are considering a foreclosure, deed in lieu, short sale, or even just a regular sale you should contact a licensed person (tax lawyer, CPA, etc) to help determine the positives and negatives of any action.
What is a short sale? In the simplest definition is when a lender(s) accepts the sale of the house that is less than the remaining balance(s) of the loan(s) as payment of that loan ‘in full.’ Even in that simple definition there are all kinds of ‘but if…’ scenarios. A real estate agent with advanced training in short sales can be very beneficial to protecting you and helping you with all the ‘what if’ scenarios.
Do to the subprime (loosy-goosy) lending practices and the troubled economy many good people are finding it hard (or impossible) to continue to make their house payments. There are many options a person could take and my site can give you more information on the ‘Hope 4 You’ page. I will be discussing just one option here and that is the short sale.
There are 3 main criteria to be a candidate for a short sale:
In default (i.e. missed at least 1 payment pass the grace period. Recently you can also be ‘near default’ meaning default is imminent. Little to no equity: the home is worth less by 8% of more than what you owe Legitimate hardship
The legitimate hardship is critical. Some situations that qualify for a hard ship are:
Loss of job or reduction in pay Divorce Illness, medical hardship, or death Increase of property taxes Increase of monthly payment due to an ARM (adjustable rate mortgage) resetting
If you meet the 3 criteria you may consider a short sale rather than a foreclosure. While neither is beneficial to your future credit ratings the short is typically less harmful and easier to recover from then a foreclosure.
What you should look for in an agent to help you with a short sale:
Certified Default Resolution Specialist (CDRS) or similar certification Knows how to calculate (not guess) what the lender will require in a sale price Knows how to protect you as much as possible from a deficiency judgment Knows that Conventional, FHA, and VA loans are handled very differently from each other – some very critical differences A REALTOR who is committed to honesty and integrity
WARNING! Beware of the many short sale scams out there. There are people promising the moon. In fact they may just be trying to rip you off. I have written several articles on scams; you can find them on my site.
A short sale is a win-win-win situation:
You are relieved from a debt that is harming you financially, mentally, and physically The lender is saved from a costly foreclosure and resale process that will only hurt the economy and the recovery The buyer gets a new home at a very favorable price
The short sale process is very challenging. There are many things to consider throughout the process. I have seen and heard about many short sale transactions hit severe bumps because care was not taken to make sure the process would run smooth. Extra work on the front end will help make the process go right.