Home Buying in San Jose>Question Details

Chrissy1, Home Buyer in Tampa Palms, FL

signed my short sale addendum today and provided proof of funds after the appraisal, is approval the next step

Asked by Chrissy1, Tampa Palms, FL Fri Nov 19, 2010

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Ryan Smith’s answer
Hi Chrissy1,

Are you the buyer? Is it an approved short sale that has to be re approved with you as the new buyer? Please provide a little more detail so we can help.

Thanks
Chris Blasic
1 vote Thank Flag Link Fri Nov 19, 2010
BEST ANSWER
Chrissy,

What "addendum" did you sign? Is this an addendum that included the "approval letter" from ALL lenders. Or is it merely a Short Sale addendum?

DO NOT put up any money in escrow UNTIL you receive the approval letter from all lenders. Otherwise it may be difficult to get your deposit back if the seller doesn't get approved for a short sale or decides to sell it to someone else. You may have to bring a lawsuit to get your deposit back. I know of a case just like this and the seller was a formerly licensed Realtor and he actually tried to get the buyer to give up half of his deposit on the house. That buyer had to file a lawsuit to get his money back!

Once you get the approval letter in your hands and with a special addendum that the seller would sign agreeing to the terms of the short sale approval letter, then you would pay for an appraisal and hire a home inspector.

While you're waiting for short sale approval you need to continue looking for properties because there is no certainty when or if this will ever close. Your contract should have the right to cancel without any penalty up to at least 5 days "after" you get the lenders Short Sale approval letter so you should be able to cancel if you find a better property.

Hope this helps.

All my best,
Alma
Alma Rose Kee, PA
Future Home Realty
813.244.9898
http://www.SoldOnTampa.com
0 votes Thank Flag Link Sat Nov 20, 2010
Want the sugar coated answer? All should be a breeze from here on and look forward to a quick and smooth closing

Want to hear the reality answer? Get ready to learn the meaning of "A Clown Car Full of Horrors!"

They have not been given the name Long Sale for nothing!

You are likely in for a very frustrating, long, dragged out process over 8 to 10 months to find out in the end that you are paying full market value for the home.

These banks are not allowing the owners of these homes walk away for so much of their debt AND sell you the home less than market vale too!

You need to keep your options open, find a good re-sale where you can have all your closing costs paid for you and lock in a rate while they are so low!

Steve McRory
Pro Option Mortgage/ Florida
steve@pro-option.com
http://WWW.PRO-OPTION.COM
Ph: 888 662 4404

Prior Service U.S. Marine Corps
0 votes Thank Flag Link Mon Jun 18, 2012
Hey Chrissy,

You posted this is 2010, did you ever close?
0 votes Thank Flag Link Sun Jun 17, 2012
Contact me. I'm a Tampa Mortgage Broker and I'll tell you what you can shave off on over all costs on the deal.


Steve McRory
Pro Option Mortgage/ Florida
steve@pro-option.com
http://WWW.PRO-OPTION.COM
Ph: 888 662 4404
0 votes Thank Flag Link Sun Jun 17, 2012
A correction on my prior post on the effective dates of HAFA: Home Affordable Foreclosure Alternative (HAFA), a Federally subsidized program to streamline short sales became effective in April 5, 2010 (August 1, 2010) for Fannie Mae/Freddie Mac owned loans) rather than 2009 as previously stated. This is a relatively new program that is still getting off the ground for a lot of lenders and is scheduled to end as of December 31, 2012.
0 votes Thank Flag Link Sat Nov 20, 2010
Good morning, Chrissy!
Darla provided an excellent detailed answer. Are you working with a Realtor who is experienced with short sales? It can be a lengthy process to get to closing. When you refer to approval, do you mean from your lender, or from the seller's lienholder? Full approval from a buyer's lender is actually the very last step, prior to closing. It occurs when all of your documentation and proof of funds have been verified, and all other conditions, such as appraisal, lender-required repairs, woodrot/termite treatment have been addressed, etc. Each transaction is different, and there are different requirements for each type of loan. The seller's lienholder has to approve the contract price, since they are accepting a deficit on the loan. Hopefully, the seller is aware that he/she may stil be responsible for bringing funds to closing, even on a short sale. Best of luck!
0 votes Thank Flag Link Sat Nov 20, 2010
Hi Chrissy. Typically, as a buyer of a house that is in a potential short sale situation, you would have signed a "short sale addendum" at the time of the offer. When the owner of the house accepts the offer, you then have a contract which is contingent upon third party approval (the owner's lien holder). The buyer's appraisal is typically not ordered until, and unless, the lien holder formally agrees to the short sale and sets the time frame for their approval. After appraisal, inspection, survey and buyer loan approval, closing can take place within the lien holder's outlined approval period (or later if an extension is agreed upon).
However, your seller could also be involved in the Home Affordable Foreclosure Alternative (HAFA), a Federally subsidized program which became effective in April 5, 2009 (August 1, 2009 for Fannie Mae/Freddie Mac owned loans) and provided a more stream-lined short sale process. If it is a HAFA short sale, the owner's lien holder would have completed an appraisal and set a pre-listed price they would accept at the time the property was initially listed for sale. Then there are very defined time-lines for the lien holder to complete their review and approval of a new buyer and the sale should be completed much faster than a typical short sale transaction. Your lender would also more than likely require their own appraisal to be completed during this process.
Hopefully you're working with a real estate professional who can keep you informed all the way through this process. Good luck on your property purchase!
0 votes Thank Flag Link Sat Nov 20, 2010
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