Home Buying in Bowie>Question Details

A. E., Real Estate Pro in Upper Marlboro, MD

Is it possible to close a short sale without an approval letter from the bank?

Asked by A. E., Upper Marlboro, MD Wed Nov 16, 2011

Basically my hubby and I put a contract on a house in June, in October they countered the date of the settlement ONLY. Well here we are three weeks later with no approval letter. My agent said today the listing agent spoke to the bank and the bank wants us to close without an approval letter. Is this possible?? My agent said she's never heard of such and neither has the listing agent. What is somebody not telling us??

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21
Absolutely not......You buyers agent must get "Authorization" to speak to the bank to clarify this misinformation. It is perfectly acceptable for the sellers and buyers agent to have access the the banks short sale process..

The seller will have to SIGN a supplemental authorization form for your agent to be sent to the bank. If the listing agent resist this.......there is your SIGN.

Greg Myers
1 vote Thank Flag Link Wed Nov 16, 2011
You must have a signed approval letter from the bank holding the short sale mortgage in order to close and obtain title insurance on the property. To do anything without this letter is not advisable and seeking professional advice from a real estate attorney is recommended. Be sure to review this letter confirming that all loans attached to the property have been released. Very important!!! Good Luck!
0 votes Thank Flag Link Wed Feb 8, 2012
No never settle without the approval letter. It can bite you in the azz later. Also, no title company will not close without it. The approval letter sets the terms of the sale. If you do not get the approval letter, this will allow you to walk. The listing agent can escalate the issue if you truly want the house. Consult your Realtor or get an attorney involved.
0 votes Thank Flag Link Sun Dec 4, 2011
So sorry to hear of your hard time in this process. As Ed said, BoA is getting better through the use of the Equator system, but is still one of the hardest banks to deal with. The listing agent has access to the Equator system and should also have contact information (phone/email) for the Negotiator. The system is user friendly and gives you step-by-step tasks to complete as the listing agent. There is no reason why the listing agent should not have the status of the short sale, even if that includes the knowledge that you will not be closing on Dec 5th (especially without an approval letter) I would implore your agent to get to the bottom of the listing agent's ambiguity on where your closing stands. I would suggest even going to the broker of the listing agent if necessary. Good Luck!
0 votes Thank Flag Link Mon Nov 21, 2011
I am afraid the listing agent doesn't understand the short sale process. BofA while they can be difficult are getting better with short sales, there is absolutely no way BofA would say "close without an approval letter" . It would appear to me that you do not have an approval and their still is documentation needed from either the seller, the listing agent, or they are still waiting for BPO.
0 votes Thank Flag Link Mon Nov 21, 2011
I did finally find out that the bank we are dealing with is Bank of America. Very discouraging. Also discouraging...the person living in the home is still under the impression that we are going to settlement December 5th. I'm thinking his agent is wack. My agent said she's in Equator, can you find out where your stuff is in the process through Equator??
0 votes Thank Flag Link Sun Nov 20, 2011
You must have a signed approval letter in order to close. I storngly adivise seekig legal consul.
0 votes Thank Flag Link Fri Nov 18, 2011
They are correct. You cannot close without the banks approval, especially since they have to provide the payoff letter.

Marco Gomez
NY Associate Broker
Keller Williams Landmark II
Marco.gomez@gmail.com
Serving Queens, Nassau and Brooklyn
0 votes Thank Flag Link Fri Nov 18, 2011
I know EXACTLY how you feel. I have had a short sale ready to close since June 10th by the sellers demand. Then they said we can't close with little to no answers. I ask because if Bof A is involved it pretty much ensures the short sale will be done poorly. If I ever have to go work for them I would rather go deliver pizza.
Press the listing agent for answers and if they can't give any try and end run around/over them. I have spoken directly to banks about short sales, the sellers' title company etc. I know it's frustrating. I have 4-7 short sales so you can imagine how I feel. :) Good luck.
0 votes Thank Flag Link Thu Nov 17, 2011
My mortgage lender says a clear NO, I have no idea which bank we are working with (or against for that matter). I asked several months ago and no one told us. We have been so super patient literally up until yesterday now it feels like somebody isn't doing there job as far as questioning and ascertaining appropriate responses from the banks. I requested magic to happen today lol, or rather some additional clarity and directness on what we need to close this mess out. Wish me luck and thanks to all of your responses.
0 votes Thank Flag Link Thu Nov 17, 2011
Not to pile on but the answers you have are all right. Plus you asked an excellent follow up question in response. Something is wrong here with the banks answer. The two agents need to talk and clarify. We as a lender could never allow the sale to take place with what you have now. It's a really strange case. What did your lender have to say? The bank should know better, all banks have so many of these cases. Is it Bank of America?
0 votes Thank Flag Link Thu Nov 17, 2011
Impatient,


If there is no approval letter or documentation from the investor, how does anyone know if you can close or not?

I doubt your lender or settlement company will close without documented approval from the investor(s). At a minimum ascertain the email approval from the investor stating the approved the sale and the time frame you need to close by.

Good luck
0 votes Thank Flag Link Wed Nov 16, 2011
I would ask for a copy of the banks email saying they want to go to settlement without an approval letter.
The listing agent might not truly understand the short sale process. In today's market a short sale shouldn't be taking almost 6 months.
0 votes Thank Flag Link Wed Nov 16, 2011
No, that is not possible nor is it likely the title company would allow that. Further, without the approval letter the seller's would not have been informed of the banks recourse against them. The title company is going to want to see approval letters with pay off instructions for all mortgages on the home.
0 votes Thank Flag Link Wed Nov 16, 2011
Impatient,

If a BANKS short sale negoriator had said that to me to "Close without an approval letter" my first words to the negotiator would be "HOW is that possible" or did you just start processing short sales this past Monday!!!

Clearly, there is a great deal of mis-communication is this process with all parties that needs to be corrected.

Greg Myers
0 votes Thank Flag Link Wed Nov 16, 2011
No...if you didn't need the bank's approval...it WOULD NOT BE A SHORT SALE...
0 votes Thank Flag Link Wed Nov 16, 2011
The title company and your lender will not allow you to close without a statement from the seller's bank allowing you to close and ifnorming the title company and your lender that the seller's bank will release the lien(s) on the proerty after closing and after they receive the money and disclosing the terms of the approval.
0 votes Thank Flag Link Wed Nov 16, 2011
What you all are saying makes perfect sense to me. My concern is why wouldn't the listing agent press the bank for the letter...and why would the bank even make that indication knowing all of what was said in the responses. #Confused.
0 votes Thank Flag Link Wed Nov 16, 2011
Unfortunately the only way to close a short sale without the seller's bank approval is for the seller or a thirda prty to cover the difference between the sale's price and what the seller owes in order to get the lien released.
So the answer will be No, because the short sale approval is the agreement that allows the Title company to recrrd the sale and get the release of the seller's loan from the tax record.

Sincerely,

Youssef Zeroual
0 votes Thank Flag Link Wed Nov 16, 2011
If the sale is indeed a short sale, than the seller owes more on the property than what the property is being sold for. And there is a lien on the property for the amount owed to the mortgage company. If the offer amount is less than the amount that is owed on the property, than everyone involved in the transaction needs an approval letter from the lender that will be shorted in order to proceed with the short sale. The buyer's lender will not be able to loan money on the property without the approval letter. The title company will not be able to transfer title from the seller to the buyer without the approval letter. That means the deed will not transfer and the seller will still own the property. The WHOLE sale is pretty much based on getting that approval letter. I hope this helps!:)
0 votes Thank Flag Link Wed Nov 16, 2011
Definition of a short sale of course is when the bank takes a discount off the amount owed. In order to do that, they have to agree in writing - otherwise the title company will not be able to issue a clean title policy because they will fear the lender will not issue a release of their lien on the property. Someone is confused to say the least......
Web Reference: http://capitolshortsale.com
0 votes Thank Flag Link Wed Nov 16, 2011
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