This is the second installment of my three part series.

– Philip Tesoriero, Co-creator of Foreclosure Guard

It is important to speak to your servicing company[3] in order to determine if they will approve the short sale. The good news is once this is done, they have thirty days to note your file with the outcome of the request. Part of the servicer’s due diligence will be to determine “expected recovery through foreclosure and disposition”, if they can determine that they will experience greater recovery of funds via a foreclosure as opposed to your offered short sale price, they often will reject the short sale. Preparing a carry cost analysis to project the costs associated with the foreclosure and the carry cost of the loan (i.e. unpaid principle ,interest, taxes, insurance) in the projected time frame until the foreclosure sale will occur will be helpful in projecting a more positive outcome.

Your servicing company will try to determine the value of the property often through a broker’s price opinion (BPO). By performing your own BPO, you are not substituting the servicing company’s BPO, but are helping to build a case for a short sale as well as influence the servicing company’s decision. A BPO is a summary of the property and a comparison of it to three sold properties and three listings. The sales and listings, known as comparables should be geographically close, and similar to your property. Comparable sales must be recent (usually within three months or less) and listings should still currently be on the market. A well prepared BPO can have a significant impact on the lender’s final decision.

With all this done it is important that an income and expense statement is prepared for the servicing company. This statement helps establish your income limitations and inability to pay your current debt. Attaching recent pay stubs along with banking statements and copies of tax returns will also be very helpful and often required.

The servicer has also required you make available to them a preliminary title report to establish any other liens that will affect your ability to transfer title. Contacting a title company and requesting them to prepare this report for you to submit to the lender will be required and is an important part of the completed package.

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[3] a company that services the daily maintenance of a mortgage loan. Applies the funds to different accounts i.e. Re tax ,property insurance, etc