Yes, it is Shirley. Banks are not nice to do business with.

Hello Shirley and thanks for your question.

Unfortunately ,the answer is "yes" the bank may decide not to approve a short sale, and instead proceed with foreclosure--and this is only one of the many elements of frustration in trying to purchase a home through a short sale.

Based on my experience, here are some of the reasons that a bank has decided against the short sale:

1) the seller was not in enough financial "hardship";
2) the Seller failed to agree to sign a promissory note for the difference between the loan amount and the short sale price (and who would blame the seller for that one):
3) the BPO or appraised price came in much higher than the offering price;
4) the bank loan balance was too high and the offering price to low in comparison;
5) the bank loan balance and offering price was so close that the bank decided to foreclose and sell on the open market;
6) the 2nd or 3rd lenders failed to agree to the price; and, my favorite,
7) the foreclosure department was never made aware of a short sale offer and foreclosed on the home while other departments of the bank were still considering the short sale.

There can be any number of reasons why the bank chose not to pursue or approve the short sale, but, unfortunately, as the buyer, we're never told what those reasons actually are.

The good news is that you will get all of your EMD back, but I am so sorry to hear that the sale was not approved. Good luck to you on your next home!!

Sincerely
Grace Morioka, SRES, ePro
Area Pro Realty
San Jose, CA