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Chapter 12 – Your Short Sale Document Checklist

Checklist for short sale sellersTo ensure that the short sale process goes smoothly and that lenders get all the needed information, it is important to know what documents are needed from each individual involved in the transaction. Following this checklist can help sellers and buyers ensure that they have everything that the lender requires. Keep in mind, some lenders may require additional documents, so it is important that sellers and buyers check with lenders to ensure they provide all documentation needed to complete the short sale file.

Checklist for Shortsale Sellers

Financial Worksheet

Most lenders will require that all borrowers submit a completed, signed and dated financial worksheet. This worksheet will include information on all income coming into the home. It also includes all expenses, which includes the following:

    • Car payment
    • Electricity
    • Current house payment
    • Car gas expenditures
    • Cable
    • Grocery bills
    • Toiletry expenses
    • Car insurance
    • Health insurance
    • Doctor bills
    • Telephone bills
    • Garbage bills
    • Gas bills
    • Any other recurring expenses that are required

Hardship Letter

Sellers will also need to supply a hardship letter, which explains the circumstances that are forcing them to apply for the short sale. Borrowers must complete the hardship letter and turn it in signed and dated.

Authorization Letter

This letter is needed as a statement that authorizes the real estate agent to receive documents from the seller’s lender and to communicate with the seller’s lender as well.

Tax Information

Tax information should be submitted from the past two years. Tax documents that should be included are the following:

    • W2s
    • 1099s
    • Tax returns

Proof of Income

Items that provide proof of income will need to be submitted by the seller, helping to show that they are financially unable to continue paying their mortgage. The following are items that may need to be submitted:

    • Two recent pay stubs
    • Bank statements
    • Letters from anyone helping to assist with bill payments
    • Award letters (for financial assistance i.e. food stamps)
    • Profit and loss statements for individuals that are self-employed (usually three months of these statements will be required)
NOTE: If the sellers are not using a real estate agent to help with the sale,
additional items listed on the next page may need to be provided by the seller(s).

Next: Short sale documents for real estate agents