Under new rules that took effect June 15, underwater borrowers with Freddie Mac- or Fannie Mae-backed loans who sell their homes in a short sale now will receive decisions on whether their short sale is approved from lenders within 60 business days.

The new guidelines are viewed as a way to speed the short sale process, which once averaged eight months, according to RealtyTrac. The long wait often had buyers walking away from the deals.

But despite the faster deadlines now in place, the process can still be prolonged if all the necessary paperwork isn’t submitted to the lender, even if just a photocopy of a borrower’s driver’s license is missing. One missing piece of paperwork could cause borrowers to have to start the submission process all over again and prolong the wait, banks say.

“The way short sales are packaged and presented by real estate agents is more than half the battle,” Ed Delgado, who trains agents how to package short sales, told the Chicago Tribune. “The more agents understand about how the process works, the fewer the delays and the faster the closings.”

One critical document in the short sale package: The hardship letter. In this letter, home owners explain why they need to short sell the property.

“You don’t need a novel … Be precise; be clear,” says Karen Mayfield, national sales manager at Bank of the West in San Francisco. “Offer a bullet-point list in your own hand of the events that led to your hardship. If the lender can’t understand how you got into trouble, he may close your file and move on to the next one. Or he may suspect you are trying to pull a fast one.”

Lenders also likely require tax returns for the last two years, bank statements for two to six months, pay stubs for the last 60 days, proof of residency (such as a paid utility bill), a listing agreement, and a third-party authorization allowing the bank to work with the real estate agent.

Sales trainer Gee Dunsten says he advises agents to bind all of these required documents together with a cover letter and table of contents that clearly lists everything included to let lenders know right away everything is there. Dunsten also says he writes a personal letter to the lender that explains the details of the transaction.

“When it comes to short sales, the devil truly is in the details,” Dunsten says.

 

The author of this article is: realtormag.realtor.org

 See the original post at: http://realtormag.realtor.org/daily-news/2012/07/03/prevent-short-sale-delays-double-check-paperwork

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