Loss Mit Services

What a Short Sale File Actually Starts With — and Why It’s Shorter Than You Think

Posted on 05. Oct, 2026 by ctlms in Blog, My Blog, Short Sale, foreclosure

“What does my seller actually have to give you to get this started?” I get that question from agents the minute a file is referred, and it usually comes with a worried tone, because most agents have been burned by a short sale that started with a three-inch stack of paperwork and a seller who stopped returning calls halfway through. So here’s exactly what a file at my office starts with. It’s six things, and it’s shorter than you’d expect on purpose.

What are the six things?

I send the seller one email with the documents attached, and here’s what’s in it.

1. The authorization to release information. This gives the lender permission to speak with us about the account. Without it they will not discuss a short sale with us, period. We need one for each lender or lien on the property, so a first and a second mortgage means two signed copies, and a judgment or a home equity line means another. This is the one that matters first, because nothing else can move until it’s on file.
2. A basic income and expense form. It’s a plain worksheet: monthly income for each borrower, what the seller owns, and what goes out each month. Nothing fancy. We ask the seller to fill it out as clearly and completely as they can.
3. A hardship letter. In the seller’s own words, what happened that made the mortgage unaffordable, and what has changed since. Servicers want to see it, and it has to be true and it has to be theirs.
4. The debt negotiation agreement. This is the three-page disclosure Connecticut requires. It spells out what we offer to do, and it’s blunt about the possible results: nobody can guarantee the lender will approve a short sale, a short sale can hurt the seller’s credit, and the seller has three business days to cancel. I’d rather the seller read all of that on day one than be surprised by it in month four.
5. The short sale questionnaire. This one is the sleeper, and I’ll explain why in a minute.
6. A copy of the mortgage statement. Plus whatever the seller has on any other liens.

One more thing that surprises people: everything has to be ink signed. No electronic signatures. Mailed copies should be copies, not originals.

Why only six? Where are the pay stubs and bank statements?

They come later, and that’s deliberate. Here’s the WHY.

Before the authorization is on file, I don’t know anything useful about the loan. Once the lender has it, we find out who actually owns the loan, whether it’s government insured, whether there’s mortgage insurance, and what documents that particular servicer wants to see from the seller along with the offer. Who owns the loan is the first thing you need to know on any short sale, and every investor has different requirements. Collecting a generic pile of documents before we know what this lender wants is how you end up collecting the wrong pile.

And then there’s the clock. Fannie Mae’s servicing guide says income documents can be no more than 90 days old as of the date the servicer first determines the package is complete. A short sale runs four to six months from start to close, with lender approval alone commonly taking 60 to 120 days. So if you have the seller gather pay stubs and bank statements in week one, there’s a real chance you’ll be asking for them again in month three. Nobody enjoys asking a stressed-out homeowner for the same paperwork twice, and homeowners who get asked twice have a way of going quiet.

Why does the questionnaire matter so much?

Because it’s where the file-killers show up early. It asks who the other lienholders are, whether there’s an HOA and whether the dues are current, whether water, sewer or town services are behind, whether the property is owner-occupied, rented or vacant, and whether the seller has ever filed bankruptcy or is planning to. It asks about military service. It asks about other real estate. Every one of those answers changes how the file gets handled.

A second mortgage nobody mentioned, HOA arrears, a bankruptcy where the liens weren’t dealt with. Those are the things that stall a closing, and the question is only whether you hear about them on day one or from the closing attorney the week before the closing date. I know which one I prefer. The questionnaire also asks whether the seller has their own real estate attorney with short sale experience, so we aren’t scrambling for one when it’s time to close.

What if the owner has passed away?

Same package, with a few additions. The estate sends a copy of the death certificate, a copy of the fiduciary certificate, and a same name affidavit for the fiduciary, which is what lets the bank accept the fiduciary’s signature on the documents. Everything else on the list stays the same.

Does a complete package mean the lender approves?

No, and I’d be lying if I let you leave with that impression. A complete starting package gets the file opened and moving. After that the lender decides whether to approve it, based on the value of the property, the offer, the investor’s guidelines, and the seller’s hardship and finances. The lender has the final say. That’s what the state-required agreement tells the seller, and it’s what I tell you.

The takeaway

A short sale file starts with six documents: the authorization, an income and expense form, a hardship letter, the debt negotiation agreement, the questionnaire, and a mortgage statement. Get them back signed in ink, and you’ve done the part you can control. The rest of the package gets built to that lender’s specific requirements once we know what they are, which keeps the income paperwork from going stale while the file waits its turn.

Send me the address and the approximate payoff. I’ll tell you within a day whether it’s worth pursuing.

As always, feel free to reach out to me with any questions.

Sean Wilder
Loss Mit Services
860-265-3727
CT Debt Negotiator NMLS #828273
Loss Mit Services is a dba of Accredited Home Services, LLC · CT Debt Negotiation License DN-828273