when does a short sale gets ratified? Is it when the seller signs or until the lender(third party) signs? I

Asked by Aung, Vienna, VA Mon Oct 27, 2008

got 2 weeks to get the loan so I am not sure when to start counting. I don't want to start locking the loan till I am sure I get the house.

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Lori Jeltema, Agent, Suffolk, VA
Fri Oct 31, 2008
Aung, you should also pay attention to the contract you signed and get varification of a few things. If you have entered into a contract and are ratified, there may be certain loan guidelines that you have commited yourself to. It looks like you're aware of that from your question. If this is the case, you should be consulting the parties involved (and hopefully your agent if you have one) and find out what your obligations are as far as loan app and lock. It should be clearly spelled out in the contract and you do not want to lose your emd because you have not complied. Everyone here will be very helpful, but obviously, your contract is not in front of any of us. The exact wording guidelines on your loan requirement may be tied to ratification or it may be tied to your home inspection or other trigger dates. I'm assuming that you had a protective clause in there that allows you , due to the nature of the short sale waiting game, to back out of the contract if the rate and terms you are able to obtain become undesirable.
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Frank Lattan…, Agent, Vienna, VA
Thu Oct 30, 2008
The contract is ratified when the buyers and sellers agree to all terms. The bank is not a part of the agree but have to agree to sell the property at the price specified. Short sales traditionally take much longer than normal because banks have so many properties to take care of, it simply takes them a while to mull thru them.
Web Reference:  http://www.fairfax4sale.com
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Vicky Chrisn…, Agent, Purcellvile, VA
Mon Oct 27, 2008
I agree with all parts of the previous answer, except the second sentence. Judging by the very good and clear advice Christopher offered, perhaps he mis-typed.

Technically, "Ratification" is when all parties to the contract (the owner and you) sign all documents, and all parties have a copy of that contract. One of the docs is likely a SHORT SALE addendum, or something which makes the thrid party approval a contingency. However, as Christopher said, the bank(s) are not party to the contract.

I hope you have an agent - ESPECIALLY with this type of transaction, you should have someone experienced with these types of transactions to explain each step and the risks and benefits involved (both of which are significant IF you have experienced agent representing YOU).

As for your lender, talk to your loan officer. Banks have varying policies on their lock - some allow you to re-lock, some offer extended locks, etc. etc. Hopefully you've chosen a lender who has a great amount of integrity, understands how these shorts sales can drag on and is someone who will be your advocate. If not, then think again. I have some great lenders I can recommend (see the Service Provider page of my web site). One in particular, Cindy Fox with SunTrust, stands out as a tremendous advocate for the buyer - she impresses me at every turn. If you're not comfortable with the loan officer you've chosen, please call her. You can trust every word she says - she's the kind of person who really does look to earn your business for life by guiding you through the lending process to ensure you have the best loan available to you, and she'll help you understand when to lock and when to wait in order to avoid unnecessary costs.

Short sale approvals can take way longer than they should - hang on - it's gonna be a bumpy ride.
Web Reference:  http://www.VickyChrisner.com
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Weymouth Gro…, Agent, Columbia, MD
Mon Oct 27, 2008
The contract is executed when you and the Seller agree to the terms. Ratification occures when the 3rd party agrees to the terms set forth in the agreement. The 3rd party ( the lender) is not a party to the contract in terms of being a buyer or seller. The 3rd party approval is a condition or contingency in the agreement. The short sale process can be reduced tremendously if the selling agent knows the process and have all the paperwork required for third party approval.

Ask your lender if they have an extended lock with a float down feature. It shouldn't cost you any extra, however; they might ask for money upfront to "lock" YOU in, not the rate.
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