SPS, which stands for Select Portfolio Servicing, was a major player in the California real estate boom of 2006. However, with all of the loans it is servicing continuing a steady decline into default, short sales of homes have now become the major player in the San Diego marketplace. A short sale is the sale of a property that is in default when the owner cannot pay enough to clear the mortgage on the property and settles with the lender for less than what is owed. Here is a guide on how to do a short sale with SPS.
Contact the SPS loss mitigation department. Explain your situation and request a short sale packet. You will receive it via regular postal mail within 10 to 30 days from the request date.
Locate a Realtor, specifically one with short sale experience as short sales can be very tricky and tumultuous for the run-of-the-mill agent. Inform him that you have already requested the SPS short sale packet, and he will help you to complete it.
Set up an appointment with your selected Realtor and go over your income statements as well as the current balance on your mortgage. Your Realtor will then submit the best course of action to have a successful short sale with SPS.
Complete the short sale packet per your Realtor's advice. This packet will be very detailed and ask questions about your monthly budget. Provide answers based on the information requested. It is imperative that you show true hardship in the budget in order to obtain a short sale approval. Credit card debt should be excluded from this calculation; focus only on the necessities for you and your family.
Write a hardship letter to SPS. This letter should include what prevented you from paying your mortgage. Things such as divorce, medical conditions, job loss or income reduction are the most common methods in which to get a short sale approved. Your letter should consist of one page only and five to six paragraphs maximum. State only facts; don't write a novel.
Prepare your supporting financial documentation. Common financial documentation requested by SPS are 2 months' worth of paycheck stubs, 2 months' worth of bank statements, W-2 statements for the past year, as well as any termination paperwork from an employee and/or a divorcee decree or filing. You will need to include this in your short sale packet.
Contact your Realtor and let him know that you have completed the short sale packet. Your Realtor will then list the house in your local multiple listing service (MLS) as a potential short sale. Your Realtor will also complete the hardship package by adding photos of the property to showcase its present condition to provide to SPS. Once all of this information is gathered, your Realtor will submit the complete packet to SPS.
Obtain acceptable offers on your property based on how many people are able to see it. You are at the mercy of the bank and home buyers. Keep your home neat and clutter free to encourage offers on the property. Your Realtor will submit all offers received to SPS for its approval. You will not be involved in the sales process as you are not going to pay any fees, commissions or turn a profit on the home. After SPS has given approval on one or more offers you will need to prepare for closing.
Sign over the property to SPS to convey your title to the property to it so that it can then convey it to the buyer and new owner of the property. The closing will be scheduled at this point. Begin moving your furniture and personal belongings out of the property prior to closing, and you have completed a short sale with SPS. Have everything moved out and keys turned over to your Realtor by the closing date.
Begin moving once your home is listed to ensure a quick sale. Short sales can save your credit when compared to a foreclosure.
Don't get emotional about the short sale. Prepare for your future and look at this as a small hindrance.