A short sale is a transaction in which a homeowner sells a property for less than what is owed, the lender takes a loss, and any unpaid balance is forgiven. For this to happen, a set of documents is needed read more to learn what is needed.

Main Documents:

• Purchase and sale agreement. This is the accepted offer. To be legally binding, it must be signed by all who claim ownership of the property.
• Hardship Letter. This is a personal letter explaining why being unable to continue paying the mortgage. This is a critical document.
• Home-owner's financial statement. This is a worksheet presenting all income, assets and liabilities. The homeowner and all co-borrowers must be included.
• Latest two bank statements. If the homeowner has more than one account, all the statements must be presented.
• Latest two pay stubs. All the stubs must be shown. Unemployed homeowners must present the latest available. Self-employed individuals can provide a profit and loss report.
• Last two years tax returns. Often, homeowners in foreclosure have missed filing their taxes. In this case, present the latest available and write a personal note to the lender explaining the situation.
• Last two years W-2s. Employers provide this to employees and the IRS every year. Provide the latest available.

upplemental Documents. In addition, if relevant and available, the following documents are very useful. In some instances, they are absolutely necessary.

• Death certificate
• Divorce decree
• Incarceration decree
• Bankruptcy discharge letter
• Relief from stay
• Proof of disability
• Insurance claims
• Police reports
• Court approvals
• Anything that may be useful

Additional Documents. Once in contact with the lender, these two additional documents will be needed.

• Listing agreement. This is a must for real estate agent commission allowance.
• HUD-1. This document shows the main thing the lender wants to know: How much the lender will get.

These are the documents needed for a short sale to be negotiated. The more complete, the better. Have all these documents. The short sale will go a lot smoother.

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