Seller and Borrower Short Sale and Loss Mitigation Documents and Instructions

Seller and Borrower Short Sale and Loss Mitigation Documents and Instructions

General Short Sale Documents
Download each of the documents below and fill out as instructed.

Lender Specific Short Sale and Loss Mitigation Documents and Links
Download the applicable document(s) (or click the applicable link) based on the mortgage company or companies that you pay your mortgage payment to each month (i.e. the mortgage servicer) and fill out/complete as instructed.

Please be sure to fill in my information as your Authorized Third Party and/or Real Estate Agent/REALTOR. Please use the information below:

Company Name: Edge Advantage Realty, LLC
Company Address: 2615 Medical Center Pkwy, Suite 1560, Murfreesboro, TN 37129
Company Phone: 615-784-3343
Company RE License #: 263576

Broker/Agent: James W. McCormack
Broker/Agent Phone: 615-796-6898
Broker/Agent Fax: 888-681-8253
Broker/Agent Email: jim@jimtherealestateexpert.com

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Federal Housing Finance Agency (FHFA) — the regulator and conservator of Fannie Mae and Freddie Mac and the regulator of the 12 Federal Home Loan Banks

The FHFA oversees Fannie Mae and Freddie Mac as well as the 12 Federal Home Loan Banks (think Bank of America, Wells Fargo, Chase (JPMorgan Chase), CitiMortgage (Citi Financial), etc.). The FHFA website offers mortgage and bank foreclosure prevention help and options. This includes the Home Affordable Refinance Program (HARP) that was expanded in October 2011 (see below).

Home Affordable Refinance Program (HARP)

According to the FHFA website, “For a mortgage to be considered for a HARP refinance, it must be owned or guaranteed by Fannie Mae or Freddie Mac. To determine if your loan is owned or guaranteed by Fannie Mae or Freddie Mac, you should contact your mortgage servicer who should verify that information for you.” You mortgage loan servicer is the bank or mortgage company that you pay your monthly mortgage payment to. You can also verify the ownership of your mortgage loan via the following resources:

After you verify the owner (called the “loan investor” in the mortgage business) of your mortgage loan and you find that your mortgage loan is owned by Fannie Mae or Freddie Mac, then you should use the following resources to obtain assistance to help stop the mortgage foreclosure affecting your home or property:

According to the FHFA website, “If your loan is not a Fannie Mae or a Freddie Mac loan, your loan is not covered by the HARP refinance program. You may want to contact your servicer or other lenders to discuss
refinance programs you may be eligible for.” You can obtain more information about the HARP mortgage loan refinance program here: HARP mortgage loan refinance program.

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Fannie Mae (FNMA) and Freddie Mac (FHLMC) Home Retention (Forbearance and Modification) and Short Sale Information – Home Affordable Modification Program (HAMP), HAFA (Home Affordable Foreclosure Alternatives) and HAFA II are under the Making Home Affordable (MHA) Program

The old HAFA Short Sale Program ended on 12/31/2012 and is being phased out. It will no longer be available after 12/31/2013. The new HAFA II Short Sale Program has replaced the old HAFA Short Sale Program. The new HAFA II Short Sale Program is only for loans owned (i.e. they are the loan investor) by Fannie Mae (FNMA) and Freddie Mac (FHLMC). See the HAFA and HAFA II information below.

HAFA Short Sale Program and Fannie Mae (FNMA) and Freddie Mac (FHLMC) Short Sale Information

HAFA Short Sale Program Information


HAFA Short Sale Program Documents – The HAFA Short Sale Program is under the MHA Program (and formerly under HAMP) so you will to use the MHA forms (do not download the forms from the government’s MHA website as they usually outdated – please use only the forms listed below) to apply for a HAFA short sale, but be sure to clearly indicate that you are requesting a short sale, not a loan modification.  For the documents that need to be filled out (borrower(s) only – i.e. if the property is owned jointly by a husband and wife, but the husband is the only borrower on the loan you only need to submit the following documents for the husband), please be sure to read and follow all the instructions exactly as written.  Generally, the documents require to apply for the HAFA Short Sale Program are as follows (use document links below):

  • Making Home Affordable Program Request For Mortgage Assistance (RMA) for HAFA Short Sale Program and Dodd-Frank Certification – This document is required to apply for the HAFA Short Sale Program and is sometimes necessary for any short sale.  Please follow the instructions carefully and fill out completely.  Please do not check any boxes or fill in any agent information in the “Is the property listed for sale?” box/section.
  • IRS Tax Form 4506-T – Blocks 1-4 – Fill out completely. Block 5 – Insert your bank’s address (not the local branch – for example if your lender is Bank of America enter Bank Of America Home Retention Services, 9700 Bissonnet Street, Suite 1500, Houston, TX 77036). Block 6 – Enter the type of tax return that is applicable to you (i.e. probably 1040). Also, check boxes 6a, 6b and 6c. Block 9 – Enter the ending date of the years for which the documents are requested (i.e. 12/31/2009, 12/31/2010, 12/31/2011 – only one in each block/box). Signature Box Area – Enter your Phone Number. Signature Box Area (Signature of taxpayer(s)) – Please sign and date on the lines provided (spouse will also need to do this if the tax returns are filed jointly).
  • Verification of Income (Proof of Income Checklist) – As the list found on this linked page shows, generally this consists of your most recent 2 paystubs, which must at least cover the last 30 days (i.e. if you get paid 1x per week then you will need 4 paystubs, if you get paid every 2 weeks or 2x per month then you will need 2 paystubs, but if you get paid 1x per month then you will need 2 paystubs).  However, the proof of income could also be Pension Income, Social Security Income, Disability Income, Alimony, business income, and any other source of income.  You will need to provide proof of income that applies in your case.  For example, if you are self employed, or own a business, you will need to provide a Year to Date (YTD) Profit & Loss Statement for the business.  If you are unemployed, but not receiving unemployment benefits, you will need to explain this prominently in your Borrower Short Sale Hardship Letter (see below) and may even need a Borrower Lack of Paystubs Letter (I will prepare this for you if necessary).
  • Bank Statements (most recent 2 months) – You will need to provide the full bank statements for all the bank accounts that the borrower(s) on the loan own. Online printouts of account activity are not acceptable. Most banks make full statements available for download via their online banking systems.
  • Tax Return (most recent 2 years).
  • W-2 (most recent 2 years).
  • Borrower Short Sale Hardship Letter (see list above under General Short Sale Documents) – You need to explain what happened and what caused you to not be able to pay your mortgage loan.
  • Borrower Income, Expenses & Financial Information (see list above under General Short Sale Documents).
  • Third Party Authorization (signed) – I will provide this document to you.
  • Listing Agreement (signed) – I will provide this document to you.
  • Utility Bill (copy of most recent one) – Your lender wants a copy of your most recent electricity, gas, water, phone, cable, etc. bill (just one bill, not a copy of each bill) to verify that the utilities are on and that you occupy the property. If you do not occupy the property then please let me know and I will send you a letter (after obtaining some information from you), which details the occupancy status and maintenance of the property.
  • Divorce Decree (if applicable) – The party that is granted sole ownership of the Property being sold must obtain a signed and notarized Quit Claim Deed from the party relinquishing ownership interest in the Property.  If you are legally separated, but not divorced the court issued separation agreement will probably suffice.
  • Military Service Orders/Letter (if applicable) – If you are currently Active Duty in the US military then you will need to provide a copy of your orders, or at least the detailed information about your current station.

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HUD/FHA Insured Mortgage Short Sale Program – HUD Preforeclosure Sales Program

HUD Pre-foreclosure Sale Program (HUD PFS Program) – If your mortgage loan is FHA insured then you will absolutely want and need to participate in this short sale program. Below are documents that pertain to the HUD Preforeclosure Sale Program (HUD PFS) and FHA Short Sales:

If you are accepted into the HUD Preforeclosure Sale Program, you will receive a HUD Preforeclosure Sale Program Approval to Participate (this is a sample), which is filled out by the bank or mortgage lender and states the terms of the short sale that will be acceptable to your bank or mortgage lender and HUD. To start your application to this short sale program please fill out the documents indicated below, but be sure to clearly indicate that you are requesting a short sale, not a loan modification. For the documents that need to be filled out (borrower(s) only – i.e. if the property is owned jointly by a husband and wife, but the husband is the only borrower on the loan you only need to submit the following documents for the husband), please be sure to read and follow all the instructions exactly as written. Generally, the documents require to apply for the HUD Short Sale Program are as follows:

  • IRS Tax Form 4506-T – Blocks 1-4 – Fill out completely. Block 5 – Insert your bank’s address (not the local branch – for example if your lender is Bank of America enter Bank Of America Home Retention Services, 9700 Bissonnet Street, Suite 1500, Houston, TX 77036). Block 6 – Enter the type of tax return that is applicable to you (i.e. probably 1040). Also, check boxes 6a, 6b and 6c. Block 9 – Enter the ending date of the years for which the documents are requested (i.e. 12/31/2009, 12/31/2010, 12/31/2011 – only one in each block/box). Signature Box Area – Enter your Phone Number. Signature Box Area (Signature of taxpayer(s)) – Please sign and date on the lines provided (spouse will also need to do this if the tax returns are filed jointly).
  • Verification of Income (Proof of Income Checklist) – As the list found on this linked page shows, generally this consists of your most recent 2 paystubs, which must at least cover the last 30 days (i.e. if you get paid 1x per week then you will need 4 paystubs, if you get paid every 2 weeks or 2x per month then you will need 2 paystubs, but if you get paid 1x per month then you will need 2 paystubs). However, the proof of income could also be Pension Income, Social Security Income, Disability Income, Alimony, business income, and any other source of income. You will need to provide proof of income that applies in your case. For example, if you are self employed, or own a business, you will need to provide a Year to Date (YTD) Profit & Loss Statement for the business. If you are unemployed, but not receiving unemployment benefits, you will need to explain this prominently in your Borrower Short Sale Hardship Letter (see below) and may even need a Borrower Lack of Paystubs Letter (I will prepare this for you if necessary).
  • Bank Statements (most recent 2 months) – You will need to provide the full bank statements for all the bank accounts that the borrower(s) on the loan own. Online printouts of account activity are not acceptable. Most banks make full statements available for download via their online banking systems.
  • Tax Return (most recent 2 years).
  • W-2 (most recent 2 years).
  • Borrower Short Sale Hardship Letter (see list above under General Short Sale Documents) – You need to explain what happened and what caused you to not be able to pay your mortgage loan.
  • Borrower Income, Expenses & Financial Information (see list above under General Short Sale Documents).
  • Third Party Authorization (signed) – I will provide this document to you.
  • Listing Agreement (signed) – I will provide this document to you.
  • Utility Bill (copy of most recent one) – Your lender wants a copy of your most recent electricity, gas, water, phone, cable, etc. bill (just one bill, not a copy of each bill) to verify that the utilities are on and that you occupy the property. If you do not occupy the property then please let me know and I will send you a letter (after obtaining some information from you), which details the occupancy status and maintenance of the property.
  • Divorce Decree (if applicable) – The party that is granted sole ownership of the Property being sold must obtain a signed and notarized Quit Claim Deed from the party relinquishing ownership interest in the Property. If you are legally separated, but not divorced the court issued separation agreement will probably suffice.
  • Military Service Orders/Letter (if applicable) – If you are currently Active Duty in the US military then you will need to provide a copy of your orders, or at least the detailed information about your current station.

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United States Veteran Administration (VA) Compromise Sale (Short Sale) Program (Owner Occupants Only)

United States Department Of Veterans Affairs Compromise Sale Program – If your mortgage loan is VA Guaranteed the following documents will be used for a VA Compromise Sale (the official name for a VA Short Sale):