Navigating the Short Sale Process With TRC
TRC Global Mobility has worked with many companies and organizations to facilitate short sales within their corporate relocation program. If a short sale is indicated, a transferee whose company is working with TRC should follow this process:
1. Contact the lender. The transferee must identify and reach the person who is responsible for handling short sales and who has the authority to make decisions regarding short sales. The transferee should try to determine whether the deficit will be forgiven by the lender. This part of the process can be time-consuming.
2. Submit a letter of authorization to the lender. To permit the lender to disclose personal information, the transferee must submit a letter with his or her name, the date, the property address, the loan reference number and the real estate agent’s name and contact information. This letter should introduce TRC Global Mobility as the third-party relocation company that will provide the transferee with a guaranteed buyout offer. The letter should give the lender permission to talk with interested parties about the sale of the home.
3. Complete a preliminary net sheet. This is an estimated closing statement showing the sale price the transferee expects to receive and all costs associated with the property sale. These costs include commission, unpaid loan balances, and outstanding dues and fees.
4. Submit a hardship letter to the lender. This is a statement of facts that discloses how the transferee got into this financial situation and makes a plea to the lender to accept less than the full amount of the mortgage. (As the third-party relocation company, TRC can help validate the property’s market value by providing a guaranteed buyout offer.
5. Provide proof of income/assets. To provide the lender with proof that the transferee cannot pay the full amount of the mortgage without undue hardship, the transferee must fully disclose all assets of tangible value, including savings accounts, IRAs, money market accounts, stocks and bonds.The transferee must provide copies of bank statements to the lender, which will require complete account documentation, including an explanation of any money entering or leaving the accounts.
6. Obtain a comparative market analysis. If the transferee’s situation is the result of declining property values, he or she should document this. Specifically, the transferee should provide the lender with a comparative market analysis conducted by a real estate agent showing similar homes, active days on market, pending sales, and properties sold during the last six months.
7. Submit the purchase agreement to the lender. When the transferee has received TRC’s buyout offer, it is presented to the lender for consideration.Each situation is unique, but lenders are often disposed to let the relocation provider assume the burden of the inventory property. The lender cuts its losses and the relocation company assumes responsibility for marketing, maintenance and resale.
8. Report the income. If the lender does forgive the deficit between the mortgage balance and the sale (or acquisition) price, this is considered income by the IRS and must be reported by the transferee.