What documents does a short sale package need?

A complete short sale package proves two things: the seller can't afford the loan, and the offer is fair. Most lenders ask for the same core documents. Missing or outdated pages are the most common reason a file stalls, so collect everything before the lender asks.

The core checklist

• Authorization to release information, signed by every borrower. Nobody can talk to the lender without it.
• Hardship letter, signed and dated: a short, honest explanation of what happened and why it won't change.
• Proof of hardship, such as a termination letter, medical bills, divorce decree or death certificate.
• Pay stubs for the last 2 months, or retirement or Social Security benefit letters.
• Bank statements for the last 2 months: every page of every account.
• Signed federal tax returns for the last 2 years.
• IRS Form 4506-C so the lender can pull tax transcripts.
• Form 710, the Uniform Mortgage Assistance Application, or the lender's own version.
• Monthly budget of all income, debts and expenses, with bills to back it up.
• Signed purchase contract and the MLS listing history, showing it was on the market at least 6 days before the offer was accepted.
• Estimated closing statement showing what the lender will net.

Tips that keep the file moving

1. Every borrower signs everything, including an ex-spouse who is still on the loan.
2. Keep it current. Statements older than 30–60 days usually have to be resent.
3. Write the hardship letter in plain words. "Unable to pay" and "no change expected," not "don't want to."
4. Track every submission with the date, the person you spoke to and what was sent.

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