Cover Letter - The cover letter should be clear and concise and give some of the following information to the bank:  overview of the homeowner’s situation, amount owed on the property, current market value (include comparable homes), and the amount of repairs needed (include estimates).  You should include your contact information and state that you hope to work work together to resolve this issue for the homeowner.

Authorization to Release Information - Some banks require you to use their standard form. Otherwise you can use your companies standard Seller's Authorization form.

Sellers Hardship Letter - This should be short and to the point, typically one page. The homeowner needs to explain their situation to the bank. Loss of equity in your house is not considered a hardship by the bank. Lending institutions will typically accept the following hardships: employment change, business failure, illness and medical costs, divorce or death of a spouse, increase in monthly mortgage payments, and natural disasters. (Sample Hardship Letter)

Seller’s Financial information – The bank normally has standard forms for this. The bank basically wants to know what money the home owner has coming in and out each month.

Supporting Financial Information:

Two years of Taxes and W-2’s

Last Two months pay stubs

Two months bank statements

Supporting Hardship info –medical statements, disability statements, death certificate, divorce paperwork, etc.

Repair Estimates for property from Contractors

Comparable Priced Homes showing  the Home’s Market Value

Signed Agreement of Sale, some companies ask for the original signatures

Preliminary HUD-1, so the bank knows what they will be walking away with

If there are other mortgages, they may ask for the payoff amount on this second mortgage

Please seek Legal advice from your CPA and Attorney.