The hardship letter is the beginning of the financial documents process in a short sale package. The items you attach to that letter will ultimately have a great deal of influence on the decision of the lender about whether to approve a short sale or not, and for the amount of the offer they’ll accept.
Whether you’re the borrower, a real estate agent, or an investor trying to purchase the home in a short sale, everyone involved should be concerned about providing all the documentation that will sway the decision of the lender.
· Financial statements
· Pay stubs
· Bank statements
· Hospital bills
· Divorce decrees
· Credit reports
· Tax returns
It’s a game of adding up numbers to show that the borrower is in an impossible situation leading to foreclosure or bankruptcy. It’s the opposite of the process to get a loan. Then you’re trying to prove you don’t need it and that you’re prosperous. Now the goal is to prove a hopeless payment situation.
The attachment of all of these supporting documents will give the lender a clear picture of the financial condition of the borrower. If the numbers support the hopeless situation, and the lender sees the opportunity to complete a short sale with a better return than a foreclosure, then you’re on your way.
The other piece of the financial documentation is about the property. The lender, if they foreclose, will need to have the home cleaned up and prepared for sale. This would include repairs for items that would de-value the property. By documenting, with repair estimates, the cost of these repairs, the case for a short sale is bolstered. The purchaser is willing to buy the property without having the repairs made. It’s another cost saved by the lender.
Posted By Nilesh Jethwa Wilmington and Leland Real Estate