According to statistics from RealtyTrac, the outfit that keeps the stats nationally, the rate of foreclosure activity is tailing off. Their mid-October report shows how a precipitous drop in September helped bring the foreclosure number to the lowest level since the fourth quarter of 2007. In other words, for local homeowners who watched their nominal equity dive while foreclosures stacked up: the worst is over (possibly, it has been over for a while).
One way stressed property owners can avoid foreclosure is to enter a short sale. Bargain hunters are still on the lookout for likely local short sale prospects. Even though the overall price curve is now on the rise, mortgage interest rates remain so low that the investment potential beckons.
By now we all understand that what a short sale is: some distressed sellers turn to this procedure as a way to avoid foreclosure. Of course, if it were a simple process, everyone in that situation would turn to it, so the actual paperwork is somewhat involved. After a buyer has committed to a purchase at a price below the amount still owed on the mortgage, the would-be short seller will encounter what is known as the short sale information packet. This packet – which is required before a lender will approve or deny a short sale – can make or break the chances of short sale success. A short sale information packet usually consists of familiar types of documentation: a listing agreement, offer letter, bank statements and tax returns, proof of income, and an estimated HUD-1 closing statement (among others). The requirements vary by lender.
What does not vary is the requirement for a “hardship letter” – probably the most important element. This is a letter describing the circumstances that led the borrower into the current situation, as well as the attempts already made to find an alternate solution. It also details the reason no other solution exists outside of a short sale. This document is usually signed and dated, with the loan number noted.
It is important to remember that every bit of information submitted on the short sale information packet has to be true and accurate, so it is vital that each document be thoroughly understood before signing. For anyone considering selling a local home — whether traditional or short sale – I hope you will feel free to contact me anytime to go over your current options. Consultations can always be confidential — and I’m always happy to help.