KW Default Solutions
If you're the listing agent, you need to explain what the paperwork establishes, not just forward a checklist and ask the homeowner to fill a folder.
Requirements vary by loan, program, servicer and stage. Even Fannie Mae's short-sale rules distinguish cases that need a complete borrower response package from cases that don't. The documents below are common examples, not a request to collect every item from every owner.
Records to identify before there is an offer
Start by finding out what exists and what the current review requires. Ask which items the servicer wants now, which can wait and where the homeowner should send them.
- Authorization and identity. A third-party authorization tells the servicer whom the homeowner permits it to work with. Read the actual form: it may allow someone to receive records, help with the review or take other stated actions. Don't assume it gives you permission to sign for the owner or accept terms. Check who is named, what they can do and whether the form was accepted. Your broker, a third-party service or the homeowners association (HOA) may need separate consent forms. Borrower ID may also be required. The CFPB's authorization guide explains why the scope matters.
- Loan and foreclosure records. Get the current mortgage statement and any foreclosure notices or court papers through the approved process. Check each loan, its servicer and any stated deadlines. Don't assume the statement identifies the investor; confirm that separately with the servicer. Tell your broker about urgent dates and help the homeowner reach an attorney who handles foreclosure matters. A short-sale request is not proof that a foreclosure deadline has changed.
- Hardship and financial records. A hardship is a problem that affects the owner's ability to make payments. A hardship letter explains what changed. Some files use an affidavit, a written statement made under oath, instead. A financial statement or monthly budget shows reported income and expenses. Bank statements and pay stubs can support income and account information. A self-employed owner may need a profit-and-loss statement showing business income and expenses. Tax returns or specified IRS transcripts may be requested too. A transcript shows selected tax information; it isn't a photocopy of the return. Ask which type and dates are needed, as the IRS explains.
Ask for the required records, not "all financials." For example, the Fannie Mae/Freddie Mac mortgage assistance application lists different ways to document income, and some hardships require no supporting documents. For its illness or disability category, it says neither detailed medical information nor records from a medical provider are required. Don't turn a health-related hardship into a request for someone's medical history. Help put the owner's account of what happened in order without making up facts or changing them to fit a program.
- Listing and property papers. The listing agreement records the terms of the listing, and a short-sale addendum adds terms for that type of sale. Required disclosures, property photos and a record of who lives there describe the property. Multiple listing service (MLS) history and the marketing record show listing dates, price changes and market exposure. HOA documents and relevant condition or inspection records may also be needed. Keep these factual and consistent with the actual listing.
- Title, liens and payoffs. A lien is a legal claim against the property. A preliminary title report helps show recorded claims and title problems. Payoff statements show amounts claimed on the first mortgage and any junior mortgages, which rank behind an earlier lien. An HOA demand states what the association says is owed. Property-tax status, judgments and other claims also need attention. Have the title or closing professional check which claims need payment, agreement or release. Start early rather than waiting for mortgage approval to discover another unresolved claim.
- Value and condition support. A comparative market analysis (CMA) uses similar sales and competing listings to help explain a home's likely market value. Condition photos and repair estimates from the right professionals can support the facts. Explain how the homes differ, and give anyone preparing a valuation accurate facts without pressure to reach a certain number.
Offer and transaction papers
Once there is a proposed buyer and deal, the reviewer can assess the sale itself. Ask which records belong in the first package and which forms are signed later.
- Purchase agreement and addenda. Provide the complete signed contract and documents adding or changing its terms. Check the buyer's exact name, price, credits, financing and dates across the package.
- Buyer funding and deposit evidence. A preapproval letter or proof of funds helps show how the buyer plans to pay; neither guarantees closing. Earnest-money evidence documents the buyer's good-faith deposit when requested. Check the required loan details and expected closing period, and share financial records only with people allowed to see them.
- Affidavits, certifications and buyer details. The file may call for an arm's-length affidavit or another signed statement about the parties and the sale. Buyer entity documents may also be needed if the buyer is a company or trust. Read the required form rather than relying on a summary of what it "usually" means. Disclose relationships, unusual credits and side agreements truthfully. Timing matters: Fannie Mae, for example, requires its Short Sale Affidavit, Form 191, at closing. Don't assume every certification belongs in the first submission.
- Estimated settlement statement or net sheet. This estimates how sale money would be paid out. Have the closing professional help prepare the figures, and make sure the price, credits and costs agree with the contract. If a term changes, update the related documents instead of changing a number in only one place.
The homeowner supplies their own records, the listing side gathers listing and property information, and the buyer's side provides the offer and buyer records. Title and closing professionals handle title and settlement work within their roles. Agree with your broker and the servicer on who requests, checks and sends each item so the homeowner doesn't get conflicting requests.
Received is not the same as complete
Before calling a document ready, check:
- The correct person, property and account.
- The dates covered and how recent it must be.
- Every required page, including pages that look unimportant.
- Readable text, required signatures and dates.
- Figures that agree with the other documents.
Here is a fictional example. The homeowner uploads page one of a four-page bank statement. You can record that a file was received, but the statement is incomplete. Ask for all four pages through the secure channel, then check the replacement. If the owner can't obtain it, ask what alternative the reviewer will accept rather than creating a substitute.
Keep private records private
Use your broker's approved systems to collect, store and share records, and give access only to people who need it and have permission. Keep extra account numbers and hardship details out of filenames and general task notes. Don't guess which details can be blacked out on a requested document; ask through the approved process.
Never ask for online banking passwords or sign-in codes. If records go to the wrong person, promptly follow the brokerage's process for reporting and handling the mistake.
Your next step
Before asking the homeowner for documents, get the current checklist and verify the secure route for sending records for that loan. Then explain each request in one plain sentence: what is needed, which dates it covers and why it belongs in this review.
Questions? Ask our team through the KWDS contact form.
KW Default Solutions is a resource for licensed agents who are new to distressed-property work. This article is general education, not legal or tax advice. Requirements vary by file.