Q: What will I have to submit for a short sale review?
A: Generally, you will need to provide the following documentation:
- Hardship letter
- Proof of financial hardship
- Financial statement
- Income documentation
- Bank statements
- Purchase and sales contract
- Estimated closing statement
- Buyer’s proof of funds or pre-approval letter
Other documents will be requested as needed per each investor’s guidelines. Upon request, we will send you a workout package and a checklist of items required.
Q: Can I get approved for a short sale before receiving an offer on the property?
A: FHA/HUD loans may provide for pre-approval if certain criteria is met. All other investors require an offer to purchase and supporting documentation be provided prior to approval.
Q: Do I have to be reviewed for a loan modification prior to being reviewed for a short sale?
A: Most investors do not require you to be reviewed for a modification prior, although it is recommended. FHA insured loans require that you be reviewed for a loan modification first, unless you meet specific “streamline” criteria.
Q: Can I be given any cash out of the proceeds of the sale?
A: You may be approved for an allowance or moving costs only, subject to loan type and investor guidelines.
Q: How will my credit be reported as a result of a successful short sale?
A: Your credit will be shown as “paid off for less than the amount owed”.
Q: What effect will a short sale have on my credit score?
A: Credit reporting will reflect the account status at the time the loan is paid off.
Q: Will the investor who holds my loan pursue me for a deficiency on the loan payoff?
A: This depends on the investor and loan type. For example, borrowers with a VA loan (i.e., a loan guaranteed by the U.S. Department of Veterans Affairs) should contact their VA representative for further consultation.
Q: How will a short sale affect my taxes?
A: Borrowers should contact a tax professional for advice and consultation regarding the tax effects of a short sale.