what does it mean when told the short sale has gone into review by the bank?

Asked by Pednurse, 08081 Tue Jun 26, 2012

we are going on 4 mos. now. We were told that the bank accepted our counter offer and that we were waiting for a letter. Now just told it went to the bank for review. Is there a chance that the bank will still not accept our offer this far into it?

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Mary Petti’s answer
Mary Petti, Agent, Edison, NJ
Thu Jun 28, 2012
Pednurse,

I agree with Marsha that IF the counter-offer you gave was a match to what the bank gave you (ie: they countered at $200K and you came back with $200k), it should not be too much longer for them to formally approve the short sale. I rarely see the bank dis-approve the when the counter-offer they make is matched by the buyer.

However, if they countered at $200K and you came back at $190K, they will go through the entire review process again. This still should not take more than 30 days.

Bear in mind though, at 4 months into it already, the process is coming very close to the 6 month limit the banks have. Once 6 months is up, the seller will have to provide updated financial information to the bank, and the bank will often order another appriasal, as the market value may have changed within the 6 months. This can significantly delay the process again.

Short sales are NOT short, nor are they easy. They are often frustrating, exasperating, and time consuming. Again, I hope your agent AND the sellers agent are aware of these parameters, and are familiar with the short sale process, or else you could be waiting a long time again for the approval.
1 vote
Now i have another question.... The final review for the bank was one week ago yesterday. Today they want us to sign an addendum stating that we will settle in 30 days. The listing agent told my agent that she has not heard of this before. I am very confused now... Have you heard of this? Will it take much longer from here?
Flag Fri Jul 6, 2012
Thank you. Very good information.
Flag Thu Jun 28, 2012
Larry Sarlo, Agent, North Wildwood, NJ
Thu Jun 28, 2012
Again I would require some authentication of where you are in the process. If the bank accepted your counter get a copy of that in writing. This way you are not guessing and confusing the terminology nor is anyone else.
any approval of offer , counter or decline should be in writing to you. At this point you are just confused in where you are in the process.

Get it in writing what the bank is doing. It is just a matter of a copy of the communication from the bank...
If its part of the "Equator" or "RESnet" system it came by way of email definitely so it is written...
get a copy then ask questions what it all means. Its merely an email or fax to you...and good to put in your file.

Get a copy (written) of all communications you were told already. It will help you clarify your position.

Search Short Sales and foeclosure Deals at http://www.BuyNjShortSales.com

Larry Sarlo
RE/MAX Preferred
609-868-1171
lsarlo@comcast.net http://www.larrysarlo.com
0 votes
Marsha Bowen…, Agent, Livingston, NJ
Wed Jun 27, 2012
In most cases, when the counter offer is accepted, the short sale approval is close to being approved. Sometime the seller could have MI (Mortgage Insurance) in which the bank will need to get the MI company approval before issuing the short sale approval. Once the MI approves the short sale, it shouldn't be much longer for the written short sale approval.

In my experience, I have yet to see a lender make a counteroffer to a buyer, who accepts it and then turn around and not approve the sale.

Good luck!
0 votes
Thank you!!
Flag Thu Jun 28, 2012
Mary Petti, Agent, Edison, NJ
Wed Jun 27, 2012
Pednurse,

I am a bit confused but I have a feeling that you submitted a counter-offer to the bank (which they ACCEPTED for review), and they are now "reviewing it" with their underwriters and investors to see if those people will accept the "new" offer and approve the short sale.

The letter you are waiting for is the "short sale apporval letter" after the underwriters and investors decide they are willing to accept your offer and accept the shortfall in what the seller owes on their mortgage. This should take no more that 30 days from their receiving your counter-offer, and may be less since they have already reviewed the "sellers financials" to see if they qualify for a short sale. Be aware that once approved, the banks usually give no more than 45 days for you to obtain a mortgage and close.

If there was an offer and counter-offer in this transaction, 4 months is not a long time for a short sale approval. Each time an offer (or counter offer) is made, the paperwork has to be "reviewed" by the loss mitigation people and the underwriters at the bank.

Your agent should be guiding you through the process and explaining what is going on (to the best of their knowledge...sellers agents don't always have all that much information from the bank to pass along to the buyers agents)

Please visit this link to read a blog I wrote about the short sale process:
http://www.prudentialnewjersey.com/mary.petti/Blog/Short_Sal…
0 votes
Maria Gilda…, Agent, Manchester, CT
Wed Jun 27, 2012
I would have to second Toni's response. The approval to participate in a short sale process is the key. Once this is communicated or released, then the chance of moving forward is more likely.

Best of Luck.

Maria
0 votes
Toni Sadiq-L…, Agent, Sewell, NJ
Tue Jun 26, 2012
Hello,

That's code for the bank is taking their time to address the file. Unfortunately, until the bank issues an ATP (Approval To Participate) nothing is for sure. It is shameful that it takes the banks so long to process short sales. But be patient and trust that your agent is doing all they can to push things along.

Once all of the paperwork is turned into the bank, everyone is truly at their mercy.

Toni
0 votes
Larry Sarlo, Agent, North Wildwood, NJ
Tue Jun 26, 2012
Well the terminology may be what is confusing.

Waiting for the approval letter is waiting for the approval... You have a verbal you should ask for a copy of that verbal. It doesn't make it official because a bank can review an offer at any time. But usually when they say the offer is accepted it takes approx 3-15 days for the approval letter which you should get a copy. Read your addendum... of your contract...

the 4 month wait is not unusual.. If the bank verbally accepts the offer there is usually a letter or communication behind those words.... the official approval letter will come shortly after explainng the specifics of the sale, how the funds are to be transferred,what expenses they will pay for and not pay for and what their net amount they will get or the sale will not go thru.

Search Short Sales and foeclosure Deals at http://www.BuyNjShortSales.com

Larry Sarlo
RE/MAX Preferred
609-868-1171
lsarlo@comcast.net
http://www.larrysarlo.com
0 votes
Autumn Urling, Mortgage Broker Or Lender, Montclair, NJ
Tue Jun 26, 2012
Do you have a signed Contract of Sale by Seller for the Short Sale and have you recexived any documentation or addendum from your agent through sellers agent accepting offer by bank?
0 votes
We do have a signed contract of sale by the seller. We did sign an addendum and have it notarized with the new price. This was sent to the listing agent and bank on May 9th. Now they say it will go to final review with Wells Fargo on 6/28.
Flag Tue Jun 26, 2012
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