Real Estate Short Sales

Time Frame and Approval Questions

I get phone calls almost daily from agents in my market asking how long the short sale lender will take to respond, if they have approved the price, and how "far along" in the process the short sale is. Here are the answers:

1. How long will the lender take? Use a 90 day closing in your contract- for starters. Depending on the lender backlog, your closing may take as long as four months, if approved. The last closing I had with EMC, for example, was submitted as a complete package on December 7, 2007. It got approval on March 27, 2008. That is almost four months. Currently, most lenders are taking 30 (if you are lucky) to 75 days to order an appraisal on the property.

2. Has the lender approved the price? It depends on the lender. Many of the bigger lenders do not pre-approve a price, for example-- Countrywide, Wells Fargo, Chase, Aurora, etc. However, a few do-- Citi Residential, Fremont. So, most of the time, the answer is "no", the list price is not "pre-approved". Most lenders will look at the price at the time an offer is submitted, and order an appraisal or BPO (Broker Price Opinion) at that time.

3. How far along is property in the short sale process? See number 2, above. Most lenders take no action on the file until a complete short sale package, with offer, is submitted. Yes, Citi Residential and Fremont are ahead of the game, but if there is a second mortgage involved, add that to your scenario.

4. Some lenders like Indymac are beginning to charge a processing fee Indymac’s is $300.00 and its non-refundable and it has to be paid in advance by the seller.


 

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