How Do I Get a Bank to Approve a Short Sale?

by Anna Assad
A short sale approval can give a troubled homeowner more time to move.


A homeowner can use a short sale to avoid foreclosure and lessen the impact on his credit report. Foreclosure is the legal way a lender enforces a mortgage loan and typically results in the homeowner's losing the house. A short sale is considered a pre-foreclosure transaction, and the lender must issue approval. The home is sold for less than what the borrower owes on the balance of the mortgage. The lender then cancels the homeowner's remaining debt.


Ask your lender which department handles short sales. A short sale is typically handled by the loss mitigation department, but a smaller lender may have another department that handles pre-foreclosure transactions.


Request the short sale paperwork and forms. The lender will mail or fax to you the forms needed to begin the short sale and receive final approval.


Gather the necessary documents for approval. Lenders typically require financial documents, such as your pay stubs, proof of unemployment, prior-year tax returns and bank statements. Proof of hardship will be required. Gather all your bills, such as medical expenses, that support the need for a short sale.


Check over the short sale packet. Make sure you have all the documents the lender is requesting. Follow all guidelines in the packet for any additional forms and the hardship letter. Hardship letters are letters that explain why you are requesting the short sale. They are commonly needed by lenders for approval. Call your lender if you do not understand anything in the short sale paperwork.


Find a real estate agent. Lenders generally require that an agent be used in a short sale. Look for agents who have prior experience in short sales. A real estate agent will receive a percentage of the sales price as payment, so ask about the agent's standard fee.


Submit your packet to the lender. You can list the home for sale once the lender issues an approval for the short sale. The approval will include the amount of time you have to sell the home before foreclosure proceedings are started or continued, and the lowest amount for which the lender will allow your home to sell.

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