SHORT SALES
Guidelines and Tips
for a Successful
Escrow Transaction
What is a SHORT SALE?
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
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Short in MONEY, not short in time
Not enough value in property to cover the
loan balances due
For property owner to sell, the bank will need
to take a loss
Where Do I Start?
Obtain Listing Prelim from Ticor Title Representative

Review Prelim:
-Past due taxes, liens, possible NOD filing
Obtain Current Payoff Statement(s)

Review for prepayment penalties, past due interest, possible
foreclosure fees.
Add extra…just in case.

Do not use mortgage statement to figure the amount due–it does
not include all of the possible fees.
Ask Escrow Officer to Prepare
an Estimated Closing Statement
Will include all costs of sale:


Commission, Termite, Property Taxes,
Prorations, Payoffs, HOA fees, etc.
Estimate figures high; pad the estimate!
Prepare Hardship Letter
Possible reasons:



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Death, Divorce, Unemployment, Medical problems
Heartfelt letter from the seller explaining the
circumstance to the bank
What changed from the time the seller obtained
the loan to now?
Seller cannot have a lot of money in the bank or just want
to sell to buy another home; it must be a true hardship
Get the Contract Signed…QUICK!
Don’t do the Work Without the
Commitment to List with You
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It’s a lot of work, but it is a valid listing and worthwhile to
you and your seller.
Disclose the Short Sale in the listing contract and MLS –
“upon approval of Short Sale” should be everywhere.
Commission is usually limited to 5%, sometimes 4%, total.
Be sure buyer is highly qualified. Timelines will be
extremely important.
Prepare the Short Sale Package
and Submit to Bank for Approval

Request Short Sale Package from Payoff Bank(s)
Short Sale Department will send Guidelines
Requesting Particular Documents:
Tax returns, W-2’s, Bank Statements, Prelim, Broker Price
Opinion, Estimated HUD, Hardship Letter
 Submit the complete Short Sale package to the Bank–be sure it is
accurate and complete.
 Be persuasive–tell the bank why this is makes sense for them and
the seller.
 Usually a two week turnaround for response

Items Commonly NOT Allowed by
Short Sale Approvals

Home Warranty Paid by Seller

Broker Commission above 5%

Seller Carry-backs

Credits to Buyers for Repairs

Seller Paid Closing Costs–if too large
Got the Listing, Bank Approved the
Short Sale, We are in Escrow…Now What?
Keep a Close Eye on Your Timelines and
Close that Deal!!

Short Sales are approved up to a certain date

Extensions will need to be requested if you get close to deadline

Any Changes to the figures provided in the Est. HUD will need
to be approved by the Short Sale Dept. in advance of closing

Close the Deal, and collect your Commission Check!
SB 306
(Chapter 43, Statutes of 2009)
SHORT SALE DEMANDS
SB 306
New Short Sale Demand
Procedures
Effective January 1, 2010
YOU NEED:

“Short-pay agreement” (approval)—already in writing

Escrow open/contract received

Preliminary Report and/or other information
about other liens
THEN SEND:

The above items

Your “short-pay demand” request
AND RECEIVE:

“Short-pay demand”*

Good for up to 30 days


Approval of estimated HUD-1, if required, within
four days of submission. Close without lender
approval if no conflicts (defer to your company
guidelines that may require prior underwriter
or manager review)
Complete all steps for Civil Code protections
at payoff
*Lender may refuse
(See Civil Code Section 2943 (b)(2))
SB 306
Creates New Escrow Terms
Effective January 1, 2010
SB 306 adds THREE NEW
definitions to California
Civil Code Section 2943
 “Short-pay agreement”
(Civil Code Section 2943 (a)(6))
 “Short-pay demand statement”
(Civil Code Section 2943 (a)(7))
 “Short-pay request”
(Civil Code Section 2943 (a)(8))
SB 306 Definitions
"Short-pay agreement" means:

An agreement in writing in which the beneficiary agrees to
release its lien on a property in return for payment of an
amount less than the secured obligation.
(Civil Code Section 2943 (a)(6))
SB 306 Definitions (cont.)
"Short-pay demand statement"
means:
:

A written statement, issued subsequent to and conditioned on the
existence of a short-pay agreement that is in possession of the
entitled person, that is prepared in response to a written demand
made by an entitled person or authorized agent, setting forth an
amount less than the outstanding debt, together with any terms and
conditions, under which the beneficiary will execute and deliver a
reconveyance of the deed of trust securing the note that is the subject
of the short-pay demand statement. The period shall not be greater
than 30 days from the date of preparation by the beneficiary.
(Civil Code Section 2943 (a)(7))
SB 306 Definitions (cont.)
"Short-pay request" means:
A written request made by an entitled person
or authorized agent requesting the beneficiary
to provide a short-pay demand statement that
includes all of the following: (A) (B) (C)
A) A copy of an existing contract to purchase
the property for an amount certain.
B) A copy of the short-pay agreement in the
possession of the entitled person.
C) Information related to the release of any
other liens on the property, if any.
(Civil Code Section 2943 (a)(8))
SB 306
Other important considerations
Closing statement deemed approved:

If the terms and conditions of the short-pay agreement require
approval by the beneficiary of a closing statement or similar document
prepared by an escrow holder, approval or disapproval shall be
provided not more than four days after receipt by the beneficiary of
the closing statement, or the closing statement shall be deemed
approved, provided that the statement is not clearly contrary to the
terms of the short-pay agreement or the short-pay demand statement
provided to the escrow holder.
Civil Code Section 2943 (c)(2))
Closing without approval of the closing
statement, if required by the short-pay
lender, is NOT without risk:
Know your company
procedures and consult your
underwriter or manager or
other appropriate party
prior to proceeding!
Quote of the Day
“Obstacles don’t have to stop you.
If you run into a wall, don’t turn around
and give up. Figure out how to climb it,
go through it, or work around it”
~ Michael Jordan
THANK YOU…
For Allowing
TICOR TITLE
& ESCROW
to serve YOU!