Reply
Established Contributor
Posts: 756
Registered: ‎01-20-2012
0

Question on short sales

Why do they take longer to close?

Fico: 701 (5/22/14) 682 (5/9/2014)
Discover IT $5,200 / CU Visa $1,000 / JC Penny$3,000
App Free since 2/2013
Community Leader
Super Contributor
Posts: 5,367
Registered: ‎03-06-2010
0

Re: Question on short sales

[ Edited ]

awdsmama wrote:

Why do they take longer to close?


Because the market price is less than the outstanding mortgage(s), the lender has to approve the sale in order for it to close. After all, the seller is asking the bank to remove the mortgage lien from the property for less money than what is actually owed. The lender has a department to handle this process, but in general the department is staffed by people that have zero real estate experience.

 

Not all sales are approved by the mortgage co. A large majority are approved, but some are turned down for reasons having nothing to do with the actual price and or terms of the contract.

 

In order to get approval, a complete package must be sent to the lender showing that the seller can no longer afford the property and that the contract is market value. Also, the buyer and the seller have to sign an affidavit that the transaction is Arm's Length.

 

Be prepared to wait for the bank to respond. Some of the banks have a fairly rapid process, others move very slowly. This is a function of the lender, their process and the specific negotiator that has the file.

Established Contributor
Posts: 756
Registered: ‎01-20-2012
0

Re: Question on short sales

Thanks for the explanation, that makes sense :-)

Fico: 701 (5/22/14) 682 (5/9/2014)
Discover IT $5,200 / CU Visa $1,000 / JC Penny$3,000
App Free since 2/2013
Moderator
Posts: 9,674
Registered: ‎01-28-2010
0

Re: Question on short sales

Also with short sales there can be more than one creditor involved, and many times the secondary lienholder may not be receiving much, if any, money from the sale of the house. This can delay or even stop deals from happening.
March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Valued Contributor
Posts: 3,406
Registered: ‎12-19-2012
0

Re: Question on short sales

Yep. That is why we were unable to short sale our house 8 years ago and it went into foreclosure because the 2nd lien holder (an individual - aka previous owner) was rejecting offers behind the scenes.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.