What happens after a short sale has been accepted

[NicoleMichigan]

Hi. I am not new to the boards, but returning after a long, long hiatus. This is a great place and I am glad to be back. I learned a lot years ago!!! Any way, a friend of mine made an offer on a short sale back in March. Just got word this week that it was accepted. Now what? Will she have to go back through the loan approval process since it has been so long? Also, she has been laid off (but should know in two weeks if she is called back). Will this affect things? How long does the lender usually make the approval good for? Thanks to one and all for your responses?

[StartingOver10]

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@NicoleMichigan wrote:

Hi. I am not new to the boards, but returning after a long, long hiatus. This is a great place and I am glad to be back. I learned a lot years ago!!! Any way, a friend of mine made an offer on a short sale back in March. Just got word this week that it was accepted. Now what? Will she have to go back through the loan approval process since it has been so long? Also, she has been laid off (but should know in two weeks if she is called back). Will this affect things? How long does the lender usually make the approval good for? Thanks to one and all for your responses?

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Usually the written short sale approval is good for 30 days, sometimes the short sale lender will put in 45 days if the buyer's loan is an FHA loan.  Once the written approval is received by the seller, then the seller signs it (accepts the conditions), the buyer signs it and the agents sign it. The buyer provides the written short sale approval to their lender so they can begin the official loan approval process for that specific property. The buyer's lender will need all of the buyers documentation to put the loan into processing and to order the appraisal. Yes, it is a problem if the buyer doesn't have the income to support the new loan. I assume the buyer needs the job in order to have enough income for the mortgage, right?

[Ron6262]

   One of the documents I signed at closing asked if there was a change in job status since the app.

I also two weeks prior to closing had to submit all pay records for final UW.  This was obviously in addition to submitting them all for the initial approval.  I think that will be a deal breaker is your friend is still laid off, assuming that is the primary income and there isnt some other source.

[NicoleMichigan]

Did they run another credit report?

[NicoleMichigan]

Yes. The job situation will be known for sure by Aug 31

[NicoleMichigan]

What happens if the appraisal comes back worth less then the offer I made?

[StartingOver10]

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@NicoleMichigan wrote:
What happens if the appraisal comes back worth less then the offer I made?

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Then the agent goes back to the short sale lender with your appraisal and gets a reduction in the contract price. Not all will reduce, some banks will just kill the deal instead.

Your unemployment issue is the real issue here.

[Sunshine85]

Even if you're called back to work, the lender will be able to tell that you haven't been working steadily by the YTD wages on your pay stub. This is a huge issue- you really need to talk to your lender ASAP...before you start spending money on appraisals and inspections.

[NicoleMichigan]

Hello. So my friend found a job. She was making 72K and her new job will pay her 50K. There won't be any lapse in pay or employment AND the house is still affordable based on her new income. I don't know here new debt to income ratio, etc. But I know that she said her mortgage was figured to be $800 a month and with her change in employment she will be bringing home $1700 per pay. Would there still be an employment issue with the loan and what if they don't find out....

[Anonymous]

I would be extremely extremely careful of buying a home at a short sale. Get a good real estate attorney! Be 100% absolutely positively sure that the bank even owns the property. The tide of foreclosures is start to turn. Counties and states are starting to declare that some foreclosures were done illegally and the original owners can come back and claim title to their property. This has happened several times in Florida alone, and in Maricopa Arizona a man had his house illegaly sold by the bank after he paid his back mortgage.  In some cases banks don't even legally have the right to sell properties because they don't own them. Do not assume that these title companies are serving your interests, they aren't, and they can be wrong as well. I would beg anyone in this day and age to get an attorney, make sure everything is clear from the county, etc. The last thing you need is a clouded title and someone coming to take their property back.