Does bank approve before or after P&S is signed?? (in MA)

I'm in the process of buying a home in MA in a short sale. My realtor told me the other day that the bank approved the sale and emailed me a copy of the P&S to show my lawyer. However, my lawyer said that often short sales aren't approved by the bank until AFTER the P&S is signed (and therefore after the down payment has been paid, since the down payment happens with the P&S and not at closing in MA). So, my question is, how does this usually work - does the bank issue a letter of approval before or after receiving a signed P&S? Thanks!

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Permalink Reply by Lori Young on March 4, 2010 at 9:23am
You have to execute (sign) the purchase and sale agreement both seller and buyer. The bank won't accept an unexecuted offer. You can wait to deposit escrow and have due UPON LENDER ACCEPTANCE. The lender does not sign the p&a and only will send the seller or sellers agent an approval letter. Did your Realtor get a copy of the approval? The approval will have the accepted sale price and the closing date for your closing.
Good Luck.
Permalink Reply by Bryant Tutas on March 8, 2010 at 2:26am
Robyn. I agree you need to sign the purchase contract. Lenders want to see contracts not offers. I am not aware of how your state's laws handle escrow and down payments but you should listen to your attorney. I do know a short sale is not approved and until the issue a WRITTEN approval. If the agent states it's approved then have him send the written approval to your attorney.
Permalink Reply by Paola Martinsen on March 13, 2010 at 4:23pm
It depends on the bank and the investor on the loan. Most banks want a P&S and some dont care if its signed by the seller or not and some want both buyer and seller signatures. Some approve with a letter of intent. What bank is it with?
Permalink Reply by Paola Martinsen on March 13, 2010 at 4:26pm
PaolaMarin said:
It depends on the bank and the investor on the loan. Most banks want a P&S and some dont care if its signed by the seller or not and some want both buyer and seller signatures. Some approve with a letter of intent. What bank is it with? Most banks wont issue an approval letter until they have a purchase contract. The case here may be that it was previously approved. Some banks issue approvals that are buyer specific, in which case they want an letter of intent or P&S from the buyer. If they issue an approval that just says how much they need to net, then they dont care who the buyer is and you can close with that approval letter as long as its not expired and you are meeting their min net.

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