To qualify your San Jose home for a Short Sale and have a Short Sale Process started by your lender; you will need to prove Financial Hardship. But before you start any Short Sale process, you should contact the US Department of Housing and Urban Development (HUD) which has Homeowner Assistance Program. In fact, HUD will assign a Counselor to help you navigate your options and they can also initiate a contact with your lender to explore ALL your options.
Once you have decided that a Short Sale of your San Jose home is your best option, you will need to prepare the following documents:
1) Hardship Letter: We have written blogs on what you should include in this hand-written letter to your bank which is an explanation as to why you can not make your mortgage payment.
2) Bank Statements : Collect your Bank Statements for past 2 months showing your Checking and Savings accounts. You need to set aside your future copies as well since the bank could ask for updates during processing your Short Sale.
3) List of Assets and Liability: This is a list of your cars and other assets where you might owe money on them.
4) Pay Stubs: Provide your San Jose Short Sale Agent a copy of your pay stubs for the for 30 days. If you get paid twice a month, then you will need 2 pay stubs. And just like the bank statements, you will need to supply your San Jose Short Sale agent with updates of your pay stubs to be supplied to the bank.
5) Taxes for the past 2 years: Your taxes are proof of your income to the lender. They will also require a 1056 T form to allow the banks to request copies of your returns directly from IRS.
6) Income & Expense Statement: This is a spread sheet that shows your income and expenses for each month.
7) Listing Agreement: This is a fully executed agreement with your listing agent to sell your house at a specific price. This is the price that the bank will use for Short Sale process.
8) Fully Executive Purchase Contract: This is the agreement signed by buyer(s), seller(s) and their respective agents that’s binding.
9) HUD -1 Settlement Statement : This is a statement that shows the bank how much they will net if they approve your Short Sale at the purchase price from your buyer.
10) Fully Executed Short Sale Addendum: This is mandatory document that your Short Sale Listing agent will prepare for you to sign. This document explains ALL your options and risks associated with a Short Sale.
11) HUD Counselor Contact: You will need to supply your lender the name and contact information of the HUD Counselor who advised you of all your options to avoid Foreclosure.
Keep in mind that Short Sales typically tape 30-45 days and you might be required to update your lender with your Bank and Pay stubs during this process. Also, your lender will be sending you confirmation information about your Short Sale process. In fact, if you have been ignoring your bank for the past 2 years, its time to open the letters that your bank will be sending you.
Finally, an integral part of developing a successful Short Sale Process is to get the right Home Value that will increase the chance of Short Sale approval from your bank. After all, it’s crazy to start a Short Sale process with your if there is no chance that your bank will approve the sale at your List price and you won’t get any offers on it.
Contact Us to explore all your option to avoid foreclosure.