Lenders Required to Decide Sooner on Las Vegas Short Sales

Cogburn Law
Madeleine Jones
August 7, 2012

A short sale is a real estate transaction where the lender agrees to allow you to sell your home for less than what is owed on the mortgage loan. Although not all Las Vegas homeowners who find themselves “underwater” are in this very situation, there are numerous borrowers who wish to sell their homes now.

Typically when a borrower sells a home for under the loan’s value, he or she is exposed to a deficiency judgment for the amount still owing. In a Las Vegas short sale, establishing the terms of the sale while ensuring that the borrower is not liable for the overdue amount is an essential component of the transaction.

Recently, many homeowners had to wait for extended periods, up to eight months on average, before lenders made up their minds whether to go ahead with the short sale. Obviously, this created even more hardship for financially stressed borrowers who either simply walked away or sought help elsewhere.

Fannie Mae and Freddie Mac, however, have just released new guidelines whereby those borrowers with loans owned or rolled over into securities by the two mortgage agencies must hear back from their lenders within 60 business days regarding short sale decisions.

An important caveat to the guidelines is that borrowers need to have all their paperwork and essential documents in order or the 60-day time can be extended. Consequently, borrowers should retain real estate lawyers and agents who have experience with short sales. Knowing what a particular lender requires for a Las Vegas short sale can also hold the lender to the 60-day time limit.

Borrower Responsibilities
Borrowers need to know the intricacies of the process or hire someone who does know. Merely listing your home for sale is not a good idea without knowing what your lender requires before a short sale can be transacted.
Some of the usual documents a borrower should begin to accumulate include the following:

• Tax returns for the last two years
• Last 2-months of bank statements
• Proof of residency
• Pay stubs for past 60 days
• A listing agreement
• Third-party authorization permitting the lender to deal with the borrower’s agent
• Brokers’ price opinion
• History of the listing
• Report indicating sale prices of other homes in the area

These documents should be labeled and packaged together in a neat binder with a table of contents.

Borrowers also need to establish hardship along with evidence of depressed housing prices in their area such as proof of loss of employment, a catastrophic injury, or divorce decree. This will make it easier for the lender to allow you to go ahead with your Las Vegas short sale and be free to apply for another Freddie Mac or Fannie Mae home loan in two years.