Short Sales

Scott Bohlen, CEO and Realtor of Preview Properties.com, just returned from the 2009 REOMAC Fall Conference held in Hollywood, Florida. Here's some information he shared with us on Tuesday:

• Lenders are now serious about completing short sales.
• Loan modifications are failing 60-70% of the time within 90 days.
• Banks achieve a 10-15% better outcome before carrying costs doing short sales than foreclosures.
• Short sales allow the existing homeowner to buy a home much quicker than if home was foreclosed.
• Deutsche Bank predicts 10-15 million foreclosures in the next 5 years.

To qualify for a short sale, the homeowner must meet one or more of the following hardship conditions:

• Unemployment
• Reduced income
• Divorce
• Separation
• Death of a spouse or family member
• Mortgage payment increase (resetting ARMs)
• Job relocation
• Illness
• Disability
• Damage to property
• Military service
• Incarceration
• Too much debt
• Medical bills
• Business failure

Here's what the lender typically needs for a short sale package:

• Authorization letter
• Hardship letter
• Copy of listing contract
• Copy of purchase agreement
• Pre-approval letters or proof of funds
• Borrower's financial statements
• Borrower's pay stubs
• Borrower's bank and investment statements
• Market valuation of property
• Market activity
• HUD settlement statement