The following must occur for a short sale to be "approved" as per the terms of the California Prurchase Agreement.
1. The Lender will have negotiated a HUD 1 (closing statement of costs) with the homeowner, stating that the homeowner is not receiving funds, and what the net proceeds at sale to each lien holder will be.
2. The negotiator(s) will issue to the seller and/or their agent or title company a written approval letter, which, in conjunction with the approved HUD statement, forms the basis of their offer of short sale and agreement with the seller. These are proprietary financial documents. Those documents belong to the seller, and are not given to the buyer, just as the buyer's loan application or loan documents are not given to the seller.
3. Per the short sale addendum, written notification is provided to the buyer that short sale approval has been received. This may be done in the form of an email to the parties from the seller's agent, the escrow, or as a certification from the title officer. Again, the buyer and buyer's agent do not receive the short sale approval letter.
The questions you need to be asking are:
1. What is the date of approval on the short sale letter?
2. Can I have a certification from the title company that the short sale letters have been received and are in good order?
3. What is the expiration date of the approval (this is the date that escrow must close before, and can be extended by the negotiator as they see fit)?
I don't think you were lied to; my guess s that you are dealing with a non-certified, inexperienced short sale agent.
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