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Real Estate Glossary

Bank Statements

The lender wants to see two months of banking activity for all borrowers on the loan.

The statements must be:

A. As current as possible
B. Consecutive months

Note: Bank statements frequently need updating if the short sale process goes over 90 days.

BPO - Broker Price Opinion

The lender will want you to provide a simple, but accurate, BPO that states your estimate of value for the property. If possible, use comps within a 1/4 mile and attach copies of MLS printouts.

Estimate HUD

The lender will work from the estimated HUD we provide, so review it carefully before including it in this package. Do not rely on the escrow officer to interpret your contract.

If the estimated HUD is to include estimates for delinquent property taxes, repairs, expenses and fees on a senior lien, allow some room in your estimate in case costs come in higher or it takes longer to close escrow.

If a junior lien holder is receiving sales proceeds, be certain to include 60 days of interest and tax pro-rations to allow time for approval and closing.

Financial Statement

The lender wants to review the borrower's monthly income/expense statements to determine the significance of the financial hardship. The financial information provided should be:

For all borrowers on the loan.
Reasonable — if amounts allocated for groceries or entertainment seem out of line, the lender might question that item and other parts of the file.

Review the borrowers financial statement before submitting it. Most lenders accept the Freddie Mac financial statement, but there are exceptions. If you have more than one lender that will be discounting their loan, you may need to have your seller complete more than one financial statement.

Hardship Letter

The hardship letter is the homeowner's opportunity to outline why they need relief from their mortgage. Make sure the letter is legible — preferably typed — and signed by the borrowers.

Consult the hardship direction samples provided by mortgage resolution services.

Letter of Authorization

The letter of authorization is required by lenders to confirm that they are authorized by all borrowers to release information to mortgage resolution services as the negotiating party.

Listing Agreement

The lender will want to see a fully executed copy of your listing agreement. Make sure the commission section has been completed and that the listing has not expired.

Regarding commission , keep in mind that the lender may want to negotiate. It is best to keep that in mind when you are settling on the commission issue with your client.

Pay Stubs

The lender will require at least one month of pay stubs for each borrower on the loan. If a borrower has more than one job, pay stubs for all jobs should be included.

We request that you get two months of pay stubs form each borrower. It helps the lender get a complete view of the homeowner's financial situation.

If the pay stubs are disability checks, these checks usually have no withholding - gross pay equals net pay. The lender will want a copy of the disability "awards letter" that outlines the terms of the disability income.

Price History Chart

The lender will want to know that every reasonable effort was made to maximize their recovery of capital. In many cases that means graphically demonstrating to the lender that the property was offered for sale at a price, or at prices, above the list price at the time an offer was received and accepted.

The "Price History Chart" should include:

List date and dates prices were changed
Number of days at each price
Each price at which the property was offered
The number of showings at each price
The number of offers received at each price
The amount offered in each offer

Purchase Contract

Please provide a "clean," fully executed copy of the purchase agreement that has been accepted by the homeowner. Include all counter offers and addendums.

*Buyer pre-approval letters are often requested, please include with contract.

Note — Please send only one contract. If you have received "back-up" offers hold them in your file. We strongly recommend sending only one offer to lenders.

Tax Returns

The lender will want to see two years tax returns for each borrower on the loan. Please have your client provide Federal returns only. If the current date is beyond April 15 and the borrower has not filed for the last full year, include the taxpayer's completed and signed extension form.

Please include all pages and applicable schedules for each tax return.

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