New York Short Sale Seller Checklist

What Goes Into a Short Sale Package — and Why Completeness Is Non-Negotiable

Every lender requires a complete package before they will review a short sale. Not review and approve — review. A missing document does not slow things down. It stops the clock and restarts it. In a process where timelines already run 30 to 120 days from offer to approval, an incomplete submission can add months.

You do not have to figure this out alone. I walk you through every item, provide templates for the pieces you do not have to locate yourself, and review the package before it goes anywhere.

Here is what goes in.

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Hardship Letter

This letter, written in your own words, explains what changed and when — the specific financial circumstances that made it impossible to continue making mortgage payments. It does not need to be long. It needs to be concrete: dates, events, how your situation changed.

Different lenders weight different hardship types differently. Job loss, medical crisis, divorce, and death of a co-borrower are the most commonly accepted. A general statement that things got tight is not sufficient. I will tell you what your specific lender needs to see and provide a template so you are working from the right structure, not a blank page.

Gather what applies to your situation:

• Termination notice or layoff documentation
• Medical bills, diagnosis letters, or disability documentation
• Divorce decree or legal separation agreement
• Death certificate, if applicable
• Any other documentation that establishes the hardship with specificity

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Financial Documents

The lender needs to verify your income, assets, and expenses. This is how they confirm you cannot sustain the mortgage and that a short sale is warranted. You gather these yourself. I give you a clear list so you are not pulling together more than necessary.

Standard requirements: your two most recent federal tax returns, two months of bank statements for every account, and two months of pay stubs. If you receive Social Security, a pension, or disability, bring the most recent award letter. If you are self-employed, a 12-month profit and loss statement is required — and it needs to be accurate, because the lender will cross-reference it against your tax returns.

I also provide a financial worksheet that organizes your monthly income and expenses in the format lenders expect. You are not filling out a blank form from scratch.

Gather what applies:

• Two most recent federal tax returns
• Two months of bank statements, all accounts
• Two months of pay stubs
• Most recent Social Security, pension, or disability award letter
• 12-month profit and loss statement (self-employed)
• Completed monthly income and expense worksheet

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Property and Loan Documents

Your current mortgage statement is the starting point. If there is a second mortgage, a HELOC, an IRS lien, unpaid property taxes, or any other lien recorded against the property — each of those lienholders has to approve the short sale before it can close.

This is one of the most common reasons short sales fail in New York. Multiple liens are not unusual here, particularly on properties that have been owned for many years, refinanced multiple times, or where owners took equity lines during periods of higher value. Discovering a lien two months into the process wastes everyone’s time. Identifying everything upfront means we plan for each lienholder from the beginning.

If your property has an HOA, a current account statement showing the balance owed is required. I handle property condition documentation as part of the listing process.

Gather what applies:

• Two most recent first mortgage statements
• Most recent second mortgage statement
• Most recent HELOC statement
• Documentation of any IRS, judgment, or municipal liens on the property
• Current HOA account statement showing dues and balance owed

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Authorization and Listing Documents

Before I can speak to your lender’s loss mitigation department on your behalf, you sign a third-party authorization form. Every servicer uses their own version of this form. I provide the correct one for your lender — there is no back-and-forth trying to find the right document. This is among the first things we complete together, because nothing moves until it is on file.

You will also sign a listing agreement and, once an offer comes in, an arm’s-length affidavit confirming that buyer and seller have no prior relationship that could influence the terms of the sale.

What you will sign:

• Third-party authorization (servicer-specific — I provide this)
• Listing agreement
• Arm’s-length affidavit (completed at the offer stage)

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A Note on Multiple Liens — This Is Where New York Short Sales Get Complicated

New York properties frequently carry layered debt: first mortgage, second mortgage or HELOC, IRS liens, unpaid county or municipal property taxes, and judgment liens recorded by creditors. Each one is a separate negotiation.

When a first lienholder approves a short sale, they typically allocate a small portion of the proceeds to buy out junior lienholders. Junior lienholders know this, and some will try to hold out for more. I handle this negotiation. The goal is a clean release from every lienholder before closing — not a situation where one unresolved lien blocks the transaction at the table.

If you know there are multiple liens on the property, tell me at the first conversation. If you are not sure, I will check. Either way, we address it at the start.

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One More Thing: You Will Need a Real Estate Attorney

New York requires an attorney at closing for residential transactions. This applies to short sales. Your attorney reviews the approval letter, the deficiency language, and the closing documents before you sign anything. I work with attorneys who handle short sale closings regularly and can refer you to one if you need it.