Lenders can and will do whatever they darn well please. Nationstar is a nightmare to work with, I know from first hand experience. If you have a good negotiator working on your short sale, he/she should be able to get the sheriff's sale postponed so that the closing can occur. In the past this was easy today. Today, however, the lenders have become more difficult to work with. Once the house goes to sheriff's sale, in many cases, the short sale will continue. This all depends on the investor and if they will allow it.
What happens in a short sale is the normally the lender will bid on the house the amount that is owed on the mortgage plus late fees and legal fees. This is called an full bid. Sometimes, the lender will bid at sheriff's sale an amount that is much less than what is actually owed on the mortgage. If this is done, it is called an "underbid". In both cases, however, the homeowner still owns the house for the next 6 months. This is called the redemption period. If the lender bid the full amount, short sale negotiations can continue. If, however, the lender "underbid", the homeowner could sell the house to you directly without lender approval.
Hope this gives you a little better understanding of the process. If you need a better explanation, feel free to contact me.
Kathy Persha, Realtor
GRI, SRF, CDPE, CIAS
Nextage Advanced Realty