Home Buying in Newark>Question Details

Tina Hou, Home Buyer in Fremont, CA

what kind of issues would cause a loan office to retrieve a loan after a pre approval amount has been issued?

Asked by Tina Hou, Fremont, CA Fri Aug 12, 2011

I guess what I want to know is ..now that I have already put in an offer and the offer has been accepted by seller on a short sale.....am I only waiting for the bank to o.k this price? Or could there be some kind of changes with the loan office as well?

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9
Cathy Sloan’s answer
I have read your question again. My answer below is in regards to the current owners lender. If you are asking about your mortgage approval the answer is different.

If you are waiting for the current owners lender to approve your offer, you are premature in originating your mortgage to purchase. You will not be in a position to start processing your loan until you have a written approval from the current owner's lender that your offer is accepted. Once the short sale is approved you will be given at least 30 days to complete your mortgage. It could take 60 days or more for the owners lender to approve your offer.
Web Reference: http://move2jaksonville.com
1 vote Thank Flag Link Fri Aug 12, 2011
Hi Tina,

Being that you have already submitted an offer leads me to believe that you have an agent; therefore, you should really be asking your agent that question. It's not fitting for another agent/broker to answer this question since you already have an agency with a real estate brokerage firm. Refer to the 'Disclosure Regarding Real Estate Agency Relationship’ form that you should have signed and received. This will help you better understand the responsibilities of the different agencies within a real estate transaction.

I hope your offer gets accepted.
Web Reference: http://www.realtorrose.net/
0 votes Thank Flag Link Sat Aug 13, 2011
Are you working with a RE professional?
0 votes Thank Flag Link Fri Aug 12, 2011
Presumably you have an experienced short sale realtor representing you. If so, your realtor is in the best position to answer your questions.

In short sales, anything can happen, and there are NO GUARANTEES

The short sale lender could counter your offer, and ask for a higher price
Or counter you to assume more expenses, like transfer taxes
Or ask for contributions from you, others to payoff parts of the lien(s)

Whatever changes that could affect the finances and $$, your loan could also be affected. So your lender must be apprised of these terms and conditions.

Good luck to you.
0 votes Thank Flag Link Fri Aug 12, 2011
Hi Tina. After the seller has accepted your offer, your offer as well as the seller's short sale application goes to the bank. They are not only reviewing your offer, but they are reviewing the seller's eligibility for a short sale. The seller will likely be turning in past tax returns, pay check stubs, bank statements, etc to the bank in order to prove that they have a financial hardship.

The short sale process can take a while because there are several steps involved, and case managers at the bank typically carry over 150 cases at a time.

The main steps are:

1) All the documents are collected from the seller.
2) The valuation phase - the lender will send somebody out to do a Broker Price Opinion, which is similar to an appraisal, in order to see what they believe the price should be.
3) The negotiation phase, where the bank's negotiator will decide if your offer is high enough, if the seller is eligible for the short sale, etc.

Best of luck with your offer!
Web Reference: http://www.lisajonsson.com
0 votes Thank Flag Link Fri Aug 12, 2011
Hi Tina, Talk to your Realtor he/she should be able to give you some answers. The time for short sales can very for many reasons. Here are a couple.

1. Who is the lender? (some take more time then others) How many loans? One loan is easier and if there are two its easier if they are with the same lender.

2. Counter offers: When making an offer on a property make it your best and highest offer to avoid countering back and forth. Each counter takes three to 5 days by the time all is said and done. So if you have 4 counters that could add approx. a month to your transaction......

Your ability to get your mortgage loan, should not change unless you do something to make the FICO score go down. Like buy a new car get another credit card or a loan of any kind. You should not buy any big ticket Items until after you close escrow........Dawn
0 votes Thank Flag Link Fri Aug 12, 2011
Tina:

You and the Sellers are parties to the offer contract that has been entered into. As part of your offer you should have submitted a Short Sale Addendum giving the Sellers a certain amount of time to get approval from the Seller's Lender(s).

A Short Sale is when the proceeds from a sale will not suffice to pay off all of the loan(s) on the property. The Seller's lender(s) are NOT parties to the offer contract; however, they must agree to take less money than is owed. The remainder is termed the "deficiency amount".

So, yes, you are only waiting for the bank to approve the contract price and the resulting deficiency amount.
Tina:

You and the Sellers are parties to the offer contract that has been entered into. As part of your offer you should have submitted a Short Sale Addendum giving the Sellers a certain amount of time to get approval from the Seller's Lender(s).

A Short Sale is when the proceeds from a sale will not suffice to pay off all of the loan(s) on the property. The Seller's lender(s) are NOT parties to the offer contract; however, they must agree to take less money than is owed. The remainder is termed the "deficiency amount".

So, yes, you are only waiting for the bank to approve the contract price and the resulting deficiency amount.

Once the lender(s) approval take place ALL of your contract contingencies start, with the exception of your pre-approval/pre-qualification letters and verification of down payment and closing costs timelines, which start when you enter into contract with the Seller, assuming you used the CAR forms RPA & SSA to make your offer.

Why aren't you asking your agent or loan broker this question?

Best, Steve
0 votes Thank Flag Link Fri Aug 12, 2011
You have the two APPROVALS backwards:
The Seller (in a Shortsale) is the Owner of the House; they are really a non-entity in this process. You would need their approval, legally, but it really isn't that important to you or the Bank.

The BIG obstacle is the Bank, and their Approval.

You really do not have anything yet.

The Bank can take two weeks to Approve, or they can take a year!

And your PRE-APPROVAL from your Lender has nothing to do with these approvals.
You needed a Pre-Approval from your Lender to submit the Offer, but you can changes Loans, or Lenders any time. You do not have a Rate locked in, and you shouldn't; it would expire before you could go to Escrow.

Right now, you just have to be patient and wait for the Bank; it may be a while.

Good luck and may God bless
0 votes Thank Flag Link Fri Aug 12, 2011
You are waiting on the bank to verify that teh current owners financial data supports that they have a financial hardship and qualify to short sell.

Once the seller is qualified, the bank will order an appraisal or Broker's Price opinions to determine the value of the home being sold. Next they will evaluate your offer to determine if it meets within their guidelines regarding % to current market value and terms the bank will accept.

If everything goes well they will approve your offer. If your offer does not net adequate funds they bank will counter your offer and you will have an aopportunity to accept the new price and terms or withdraw your offer.
0 votes Thank Flag Link Fri Aug 12, 2011
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