Buyers Lender Demanding FULL Short Sale Approval Letter

So it seems to be a growing trend now that a buyers lender is demanding to see the lenders full blown short sale approval letter, not just the cover page with all the terms. In the past i have always taken the approval letter and removed the SS# and Loan# for obvious reasons. I got a call yesterday from a buyers lender demanding to see all the pages of the approval letter, that clearly have no information that they would need. They told me that they are getting bombarded with Realtors who are faking short sale approval letters to keep buyers around or maybe to buy themselves some time until they get a real approval. 

 

I'm calling our legal hotline tomorrow when its open, but i wanted to see if anyone had ran into problems with this lately? I would hope the NAR would weigh in on the issue. Seems as though we as Realtors are opening ourselves up to all kinds of legal problems if we start giving out anything a buyers lender demands just because we have scumbags ruining it for the rest of us.

 

Thanks!

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Permalink Reply by Bryant Tutas on July 3, 2011 at 3:56am
Travis. You know I have rarely seen a short sale approval letter with a SSN on it. Have you? They usually just have a loan number, sellers name and mailing address. I just checked Chase, Suntrust, BofA, Nationstar and Wells Fargo and none of these have the seller's SSN on them. So what personal information are we really providing?

By the way the Florida Far/Bar Short sale addendum to the purchase contract has a clause requiring the release of the short sale approval letter. Buyer and seller sign this addendum at time of contract.

Now having said that, IF the short sale approval letter had the seller's SSN on it I would white it out. But from the letters I've seen that is not an issue.
Permalink Reply by Travis Davies on July 3, 2011 at 4:07am

Hey Bryant, the one i got this week that started this thread had all their information on it (small local bank). I call foul on the lender for doing so.....since it was a raw .pdf i simply took out the SS# and Loan#. 

 

Personally I'm going to get a signed release from now on. Utah is known for the fraud capital of the world so i wouldnt doubt the FBI is watching. Hell they probably have two offices set up now from all the past cases!

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on July 3, 2011 at 4:21am

Same here in CA - Short Sale Addendum signed by both Seller and Buyer specifically states that the Short Sale Lenders' approval letter must be provided to the Buyer within a certain period of time - both from when the PA was signed and from when the Seller received the approval. If not, the Buyer can cancel.

 

Quite frankly, since the Seller agreed via the Addendum, provide it to the Buyer's agent (for the Buyer) and they can deliver it to the Buyer and the Buyer's lender!

 

Bryant, I agree with you, I have not seen any Short Sale Approval Letters include the Seller's SSN.  Loan #, yes to which I redact the middle 4 digits - no one has resisted that.

 

Thom



Bryant Tutas said:

Travis. You know I have rarely seen a short sale approval letter with a SSN on it. Have you? They usually just have a loan number, sellers name and mailing address. I just checked Chase, Suntrust, BofA, Nationstar and Wells Fargo and none of these have the seller's SSN on them. So what personal information are we really providing?

By the way the Florida Far/Bar Short sale addendum to the purchase contract has a clause requiring the release of the short sale approval letter. Buyer and seller sign this addendum at time of contract.

Now having said that, IF the short sale approval letter had the seller's SSN on it I would white it out. But from the letters I've seen that is not an issue.
Permalink Reply by Scott Korbin on July 3, 2011 at 4:21am
You'll get no argument from me on that issue, just stating the facts, and "Facts are friendly."
Permalink Reply by Scott Korbin on July 3, 2011 at 4:24am
Pretty much the same in NC.
Permalink Reply by Mike Horton on July 3, 2011 at 4:38am
This is a growing problem. In Arizona you are required to provide an agreement notice not the letter. If you are releasing SS numbers, I think you will find that is technically a violation of Sarbanes Oxley federal privacy act. In my case I require a letter directly from the lender stating the request and then get approval from my seller. The information is then sent directly to the lender and not to the agent. Protection of an individuals social security number is the elephant in the room.
Permalink Reply by Bryant Tutas on July 3, 2011 at 4:41am
Harry, While some of Travis's statements may be a little overboard he has brought up a very good topic for discussion. We want to encourage folks to do so. No need to belittle. OK?
Permalink Reply by Bryant Tutas on July 3, 2011 at 4:45am

I think what we have learned here thus far is:

  1. Be sure to remove SSNs
  2. I would also remove seller cash incentives
  3. Be sure your seller has authorized in writing that it's OK to release their approval.
  4. Only release it if it is requested.
  5. Be sure the seller has approved the short sale terms and conditions before doing anything with the approval letter.

Anything else?

 

Permalink Reply by Julia Fishel on July 3, 2011 at 4:48am

The voice of reason (Bryant T.) has arrived.  Thank goodness :)

Permalink Reply by Toni Campbell on July 3, 2011 at 4:52am

If the seller is getting $20,000 back from the sale, is'nt that a proceed? The buyers I have worked with balk at having to pay anything additional over the asking price even after explaining the short sale process I can't imagine what they would do seeing that!

I just completed a short sale representing a buyer on a Wells Fargo condo short sale in which the approval letter contained pages for the seller and separate pages for the buyer which required them to sign. It stated that the buyer understood the seller was not making any money from the sale, neither party was related in any way, the lender was 1099'ing the seller, and included the sale price. It did have the original loan #'s but no ss# or private seller information. WF would not move forward until this document was signed by both parties. This was a cash deal so no other lender was involved.

With all that is out there it seems to be another defense to help against possible fraud.

 

Have a fantastic Independance Day!

Permalink Reply by Bryant Tutas on July 3, 2011 at 4:55am
I understand. I'm just making sure we all stay on topic. Travis is not in CA. He mentioned in one of his comments that the letter he was provided from the lender did have the sellers SSN number on it. Can we agree that this should be removed before forwarding on? Folks that aren't in CA, NV or FL live in a different short sale world than we do. Travis is just voicing his frustrations.
Permalink Reply by Toni Campbell on July 3, 2011 at 5:02am

Agreed. In Florida or any where I would remove the ss# and then have buyers sign.

Thanks Bryant.

 

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