Proof of Short Sale Needed for Future Purchase, Proof of Hardship (not just the 1 page lender letter needed)
When applying for a new mortgage after you have had a short sale, you will need:
- HUD 1 from the short sale showing mortgage(s) included in the short sale
- letter of short sale approval from short sale lender(s)
- If you had a deficiency loan to pay back after the short sale:
- initial short sale agreement from lender
- terms/verbiage where requirement to pay back the mortgage was stated
- letter/proof when lender stated loan was forgiven if not paid off
- Initial letter of hardship given to your lender
- If you were required to be delinquent, letter explaining who told this to you and how long you were delinquent.
- Final letter of hardship for new lender stating:
- all possible ways you tried NOT to short sale
- the event that finally occurred where you had no choice but to short sale your home
- list the amount of negative equity/loss you would take to sell the home and your liquid assets available.
- Deficiency forgiven 1099 if received
New Hardship Explanation Letter
This will be the hardest part for most of you.
Read the original hardship letter. Often, the letter given to the short sale lender is short and explains what was happening just prior to the short sale. This letter needs to be more detailed on all that you did to prevent the short sale. Understand that lenders need to be convinced that you will not default on the new mortgage and that the decision to short sale a past home was done as a last resort, and that it finally occurred when all else failed.
- Reread this letter and make sure that details leading up to the short sale and everything that you did to prevent having to short sale is stated.
- State what the final event was that prompted you to short sale, and why the move was necessary.
- Explain if you used assets from savings, retirement funds or borrowed funds, if there were any available.
- Note if you were already delinquent on your mortgage prior to the short sale. If you were told to go delinquent in order to get short sale approval, please state this.
- Finally, explain how you are in a better position now and why defaulting on your mortgage will not happen again. Explain importance of credit as it relates to you.