-          homeowner decides to request short sale approval from their current mortgage lender (ask their lender to forgive the difference between what is owed and what they can sell it for)

-          homeowner lists their home for sale

-          homeowner accepts an offer from a buyer

o       purchase agreement includes contingency for seller to obtain short sale approval from their current mortgage lender(s)

-          homeowner’s real estate agent submits short sale package to homeowner’s current mortgage lender

-          short sale package typically includes

o       letter of authorization – for lender to speak with realtor

o       listing agreement between seller and broker/realtor

o       purchase agreement between seller and buyer

o       homeowner’s hardship letter – reason for short sale request

o       homeowner’s income statements for two months

o       homeowner’s financial statement

o       homeowner’s tax returns for two years

o       homeowner’s bank statements for two months

-          current mortgage lenders are inundated with short sales and the process includes numerous steps

-          the response for approval, or denial, of a short sale from seller/homeowner’s current mortgage lender can take a few weeks to a few months, or more

-          the process typically will test anyone’s patience / seller, buyer, and agent

-          once short sale approval is granted by the homeowner’s current mortgage lender, it will typically include conditions; seller and buyer must approve the short sale approval

-          conditions of short sale approval can include – but are not limited to – a specific date to close by, a requirement that the seller agree to a note payable to their mortgage lender, a deficiency clause, no monies to be received by seller/homeowner, etc.

-          assuming seller and buyer approve of the short sale approval, the buyer then begins their process to review disclosures, have their inspections, follow-up with their lender, and an appraisal is done – complete their process to purchase

-          typically, once the short sale approval has been issued the process proceeds as usual

-          selling or purchasing a home in a short sale process can be lengthy and frustrating requiring much patience.

You are advised to consult with an attorney and CPA regarding pros and cons of short sale, and/or alternatives.

bky-ss-rev 3/30/10