Sharing Short Sale Approval letters
I was just wondering once you receive an approval on a short sale if you share the approval letter with the other party? Is it okay to share the letter with the sellers personal information with the other party to the transaction?
Replies to This Discussion
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Permalink Reply by Ricky D. Ostrom on
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There may be contingencies in the approval letter that the buyer has abide to, so of course they get a copy. For example, not being able to resale the property after rehabbing for 30 - 90 days.
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Permalink Reply by Paul Antonelli on
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I agree with Brent. I'm also in Florida and after our attorney goes over the approval with the seller and I have approval. I have to give it to the buyers or the lenders will not touch their buyers file without it. Plus if they have 5-7 days to complete their inspections, per the lender, it starts from the date on the approval letter. Or, we start with the date on the last approval letter we got from the 2nd lender to approve. That is when we are fully approved.
Paul Antonelli
Aug 10 in Orlando
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Permalink Reply by Terrance Quinn on
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Most of the time you mat have to share it with the buyers lender so the can proceed with loan approval
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Permalink Reply by Marti Sauers on
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In Arizona ... an agent should never provide a copy of the approval letter to the buyer, in my opinion. It is so much better to use the Agreement Notice Addendum. Everything I have seen in this thread can be put into the addendum. If you don't have a form in your files, ask your broker. If they don't have one, I'm pretty sure CDPE has a standard form.
Many reasons you would never want to give the buyer the actual letter:
1. The approval letter belongs to the seller. The letter is between the seller and the bank. Just as the buyer would never give the seller copies of their loan documents as proof of pre-qual (can you imagine??), the approval letter is no different. Even with permission, does the seller really understand all of the ins and outs of what could happen if the buyer sees that letter? There's no way ... So, when things fall apart, who is the expert? Not the seller ... we are! I can hear the seller now ... "But your Honor, I didn't know what I was agreeing to ... Isn't my agent the expert?"
2. The Seller has the right to (and should always) have the approval letter reviewed by an attorney and/or tax counsel and therefore, the letter could be several days old before the buyer receives notice. Not something you want the buyer to see, and not something the buyer needs to see. Most would never be able to really understand the reason the seller held the letter. The short sale addendum in AZ requires we give notice of approval to the buyer. BUT, approval isn't one sided - in any state. Just beacuse the bank issues the letter, the seller still has to agree to the terms. And there can be some time between date of letter and seller agreement to move forward.
3. "Written notice" does not mean a copy of the letter. Again, does a pre-qual include copies of the actual loan docs? The Agreement Notice Addendum provides everything required in the contract. A lot of agents are relying on Title in this thread. In AZ, that doesn't protect you, in my opinion. Is title the expert? Do they represent your client in this capacity? No and no. I'm going to double check, but I don't think the buyer ever sees the approval letter from title at closing. But, maybe I'm wrong.
Happy selling all! Be careful out there!
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Permalink Reply by Mike Horton on
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Your comments are very much appreciated. Arizona provided the short sale agreement notice to insure that if there is any, again any changes to the purchase contract then an addendum is added which outlines those changes so the buyer may agree or decide not to futher pursue the purchase. Simply providing an agreement letter notifies that the contingency has been removed but does not give the buyer the right to back out of the contract at that point. PLUS and this is a big one, the agreement between the seller and the lien holders is not a part of the purchase contract and to release that information is a breach of confidentiality. There maybe information in the release letter that provides information that is not a part of the purchase contract but may influence the buyer to back out. Listing agent has just breached his fidicuary responsiblity. Writing an addendum that clarifies all changes in the contract keeps visibility where it belongs. On the contract.
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Permalink Reply by Don Ferguson on
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It's hit and miss with us. We have had a few times where we have given it to the buyers realtor and they over anylize the letter and it doesn't close.
In A normal transaction the buyer doesn't get a copy of the payoff and that's how we pretty much look at it.
If there are things that come with the pay off the buyer needs to agree to of course those documents go straight over.
If the buyer is listed as a recipient we will give it to them if asked.
It's not a matter of hiding anything the closer or closing attorney are the ones that need to follow it to the letter and that's where we send it
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Permalink Reply by Sheila Vardakis on
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I just had the buyers lender require it in order to send their file to underwriting. The lender is BOA. It's the first time I have had this happen and really didn't see an issue since it will be revealed and signed by all parties at closing.
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Permalink Reply by Ann Wilkins on
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I represent buyers on short sales on a regular basis and it is standard practice to provide the short sale letter to the buyers agent so that the loan can be started. Our lenders do not lock in rate. order appraisal whatever until they see the short sale approval letter. One lender caught that they had mispelled the buyers name which happens. The letter is also required to be kept in our transaction point file.
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Permalink Reply by Cindi Infiesto on
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I'm in Florida and the answer is YES. I don't know what common practice is in other areas, but I would think that since this is a federally regulated transaction, that the same rules apply. The buyer's lender will not move forward without it and what is the actual harm? I do, however, removed the borrower sensitive information if there is any. Additionally, in light of the latest scam (short sale listing agents creating bogus letters of approval from the banks), if you read the tea leaves, things will be changing and new guidelines will be put in place. I actually have knowledge of this happening on a transaction and the fake approval was obviously short of what the bank would accept. It wasn't discovered until after closing. The title company paid the difference, but went back after the agent for it - who of course denied any knowledge of this. Long story short, that agent is without a license today.
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Permalink Reply by Julissa Jumper on
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Oh my stars! Why do some people wake up in the morning just thinking of what crazyness they can conjure up?
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Permalink Reply by Rick Ketterling on
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I'm in Minnesota and I always give the buyers agent a copy of approval. We cant get a loan officer to submit for final underwriting without it. I wont move a short sale forward with my buyers lender, without a copy of the short sale approval. I cant imagine someone refusing to share the approval letter. I want to prove you have an approval. I have had agents tell me they had an approval, to find out is was a verbal approval and the written one never came because investor denied it.
The only sensitive information would be their SSN, other than that it is all public knowledge in the foreclosure filling with the county. Cross out the SSN and send it over to the buyers agent, lender and title company. Everyone will be smiling and close quicker.
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I agree Rick. I'm not certain why this is even a discussion point. : )
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