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 Thom Colby CA Brkr 888-391-5245 on July 3, 2011 at 7:44am
Any funds distributed to anyone in the transaction need to be shown on the HUD.

Julia Fishel said:
Sorry about that.  Seller was going to be receiving funds from One West.  When I questioned it, it was explained to me that only buyer's or agents' contributions had to be shown on the HUD.  And I ran it by the Seller's attorney processing the file and and he said it was fine (and my broker).  Oh dear ... ?! 
Permalink Reply by Scott Korbin on July 3, 2011 at 7:46am
Nice post by Tni.
Permalink Reply by Teresa Hatler on July 3, 2011 at 8:49am

I agree Linda!



Linda Gregory said:

Just my opinion-but Buyers today are getting even more greedy-that buyer is already getting a great deal on the heels of a seller who has come upon hard times-so much so he is losing his home-and the $20,000 Chase is giving the Seller probably won't do much to bring that Seller to the financial equivalent of the buyer-to me the mindset that because the Seller is getting $20,000 from Chase, he should get an even better deal-is ridiculous. If I were that Buyer sitting at the oppposite end of the signing table at closing facing a couple who have essentially lost their home-I would be having bitter sweet feelings-Just saying...

Bryant Tutas said:
But what if.....it's a Chase approval showing the seller getting $20,000 back? I just had this happen this week. The buyer is cash so there is no lender involved. However I sent the letter over to the BA, as per the terms of the short sale contingency in the contract, with I noted not to give it to the buyer since it contained personal infomation. The BA called me and mentioned that of the buyer had seen that letter they would want a better deal on the property knowing that the seller is receiving finds at closing. So maybe we rerleasse the letter to the BA and the buyer's lender but make sure they sign a confidentiality form so they buyer doesn't get to see it. Thoughts?
Permalink Reply by Dana Harris Carter on July 3, 2011 at 11:02am

Absolutely NOT!!! Respectfully, I've been a Shortsale Specialist (Preforeclosure/Bankruptcy/Fraud Specialist) exclusively for 15 years I have/will NEVER give a copy of a shortsale approval letter to anyone. This is a violation of the buyer's confidentiality. You'd be crossing the line and could face an investigation up to and including by your local Real Estate Commission. This is why it's good to establish the best rapport that you can with the Buyer's agent so that she/he can help eliminate this problem. To overcome this objective I've simply sent an email to the buyer's agent, (only 1 has asked in 15 years) signed by myself, a licensed Realtor that I am in receipt of a final Shortsale approval letter from the seller's lender for the specified Sales price, closing costs and/other conditions agreed upon in the contractual agreement. We have to be very careful because there could be personal and confidential information on that letter that is totally irrelevant to the transaction.

If the Buyer's agents/buyers suspect that a Realtor has given them fake documention, then they need to pursue it with the Real Estate Commission (it's called FRAUD and there is no statue of limitation on Fraud with reference to a Realtor) or they can litigate. In fact I would NEVER let a buyer's agent even know who the lender in question is because some of them are unethical and will try to go behind your back and contact the lender even without the appropriate authorization. If this buyer is not happy, I'm sorry then he/she will have to move on to find another property. It won't be worth the headaches and the mess that it could potentially create after the fact. Thank you for letting me get directly to the point :-) I wish you the best! P.S. - Even if your legal hotline says it's ok, unless they put it in writing and are willing to pay ALL of your legal fees (not just the small coverage we as Realtors have) then I certainly would NOT do it. They will hang you out to dry!!!

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on July 3, 2011 at 11:55am

Hi Dana

 

With all respect, some states (like California) include a requirement for the Seller to provide the Buyer a copy of the Short Sale Lenders' approval.  This is not at the whim of the Listing Agent or anyone else.  I am Listing Broker - primarily Short Sales and although I may not like it, it's the rule here in CA.

 

Also, help me understand a couple of your comments;

 

"I have/will NEVER give a copy of a shortsale approval letter to anyone. This is a violation of the buyer's confidentiality." - How is it a violation of the Buyer's confidentiality?

 

"I would NEVER let a buyer's agent even know who the lender in question........."  Anyone only needs the address, and they can get a copy of the Deed of Trust which has the Loan# and most times the actual lender on it - then run it through a couple of public databases and they would have the lender in a few minutes.  Tell me an address and I'll show you how quickly I can get it.

 

"If this buyer is not happy, I'm sorry then he/she will have to move on to find another property. It won't be worth the headaches and the mess that it could potentially create after the fact."  Do all of your Seller Clients tell the Buyers to take-a-hike if they ask for it?  Is it your headache or your clients' ?

 

I really do understand and appreciate your passion, but not all states and jurisdictions are the same.  And before giving everyone on this website a lesson, you might want to be aware of how far reaching your audience is.  In CA, if we refuse to give the letter, we lose our license - plain and simple....... just sayin' ....

 

Best,


Thom Colby

Broker / Owner

Newport Beach CA

Permalink Reply by Kimberley Kelly on July 3, 2011 at 12:06pm
I know several Short Sale Agents and also of one negotiation company that I suspect are doing what Sherry says..those same Shorts end up for sale as soon as they close.  Makes me crazy because I try to get the most for my Sellers and their Lenders and will not submit offers that are too low.  There are schmucks in every business..
Permalink Reply by Scott Korbin on July 3, 2011 at 1:05pm
In NC, the SS Addendum reads "...[seller] shall reasonably cooperate in the SS process by providing such documentation as may be required."
"Seller agrees to provide Buyer with written notice of Lienholder's approval."
Permalink Reply by Catherine Gheen on July 3, 2011 at 6:30pm

I have heard some small rumblings of Chase giving the seller's these large amounts of money in a short sale, but I thought it was fake?

 

I wonder what program this is under where the seller receives that kind of money?  It is certain investors that are giving the seller's this amount?

 

It is from the old WAMU flex pay loans (aka pick-a-pay?)

 

There are always bad agents, or bad loan officers.  In California that is why we have so many people losing their homes.  In the county I live in 90% of the loans done in the hay day were pick a pay loans.  Mainly for the rebate on the back end.

 

I have seen many buyer's lender's underwriters are now demanding all of the pages of the approval letter, however none of the approval letters I have received contain my seller's social security numbers on them?

 

Happy 4th Y'all it has been nice to have the phone quiet for the holiday!

 

Catherine

Permalink Reply by Donna McClelland on July 3, 2011 at 9:17pm
I agree, Travis, and I've run into lenders starting to ask for them, too.  Perhaps we should give them a taste of their own medicine and demand they give us a third party authorization from our seller first?
Permalink Reply by Gail Oleaga on July 4, 2011 at 12:23am

Good morning,

 

The Buyers lender needs this. I have been requested to send this many many times. You can tell the Buyers Realtor that for privacy reasons you are removng the Sellers personal information and you can also send it directly to the Buyers Lender.

Hope this helps!

 

Gail

Permalink Reply by Enrique Vasquez-Plaza on July 4, 2011 at 5:12am

If you have a COMPLETE AN TRUTHFUL SS APPROVAL, I dont see why not sending such approval to the lending institution.  Lending institution must revise everysingle page to make sure approval is right and has no hidden terms that may affect them.

 

Erasing the loan number??  Well, I see no reason for this... to me its just a waiste of time.

 

So you worked hard to get the ss approval?

Now, you need a buyer to close your deal?

SO WHAT ARE YOU DOING PROVIDING 25% OF AN APPROVAL LETTER, THAT WAS ASKED TO BE PROVIDED IN IS ENTIRELY...???? If you are asked to provide the approval, fax it in is entirely! PERIOD!

 

Why do I want the buyers loan not to get through? After all I have done??  I think not faxing a complete approval its just silly and a complete waist of time.... Like Harry Clay said, this is a team effort, and I see team skills failing here!  But that is my humble advise!!

 

Good luck, and If I am you, I would stop mutilating the approvals! 

 

Permalink Reply by Ray Snook on July 4, 2011 at 5:34am

Personally I believe you have done your duty by providing the approval letter to the buyers agent. It is not your place to send it to the buyers lender. The buyers agent should do that, since the lender has a relationship with the buyer and not you the listing agent or the seller. If the buyers lender wants a copy refer them to the buyers agent. I have never seen a SS # on an approval, generally the sellers name and address is there, but the buyer knows that anyway - and it is public record on the tax roll.  

In this way you have not breached confidentiality -  you just complied with the short sale addendum. And to be honest the lender needs to see all terms of a short sale approval - whatever happened to full disclosure? I personally would be more worried about hiding some of the terms (Seller to get 20,000 from Chase)  than disclosing them!

Just my two cents.

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