Short sale has been approved with some criteria, most of which is straight forward but there are a few lines that I'm not sure of. Can someone help out?

 

1. Seller paid closing costs not to exceed $3000.

2. Buyer pays any and all additional closing costs.

3. Seller paid cash contribution of $2000 required at closing. 

 

We asked for Aurora to pay the closing costs, so I figure #1 means they will pay up to $3000 in closing and buyer pays anything above (#2).

But then #3 seems to mean they want us to pay $2000 to them (Aurora) at closing? Or? Both #1 and #3 say "Seller paid" so does that mean they are not covering closing costs up to $3000?

 

Thanks for the help.

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You are correct on 1 and 2. #3 means that the seller is agreeing to pay acertain amount towards what is owed in order to approve the short sale.

I believe 1) means the closing costs will be paid from the sales proceed as usual; and 3) means Aurora wants your client (the owner of the house) to contribute $2,000 cash at closing. 


Sometimes the lender just want the homeowner to bring cash to closing table as part of the short sale settlement. 

Aurora's paid closing costs generally match the closing costs on the HUD that you submit with the short sale package.  If not, either the seller or the buyer can pay the difference or you may be able to re-negotiate the closing costs that Aurora will pay so that the figures match.

 

Aurora wants the seller to contribute $2,000 at closing.  If the seller is unwilling to contribute the funds then you may be able to re-negotiate this term.

Thank you for clarifying it for me. 

 

One other thing, once the sale closes, then the seller is no longer responsible for the amount forgiven, correct?

I've seen on here that sometimes they ask for a promissory note or reserve the right to collect on the difference later...but if it's not specifically in the short sale approval letter, then it should be 100% done and they cannot come back after the seller later...right?

It depends upon the short sale approval letter. Does the approval letter say that the seller has full satisfaction or that the lender waives the right to a deficiency judgment? If not, your seller is not protected.

It Aurora was asking for a promissory note it would be on the short sale approval letter.

Usually Aurora and other lenders tell you what they want and your seller and or buyer agree to the terms before Aurora issues the approval letter. Nothing on the approval letter should be a surprise.

It does not specifically write that the lender waives the right to a deficiency judgement. There is no mention of a promissory note.

 

What it does say is...

 

If the short payoff amount is remitted to us, Aurora Loan Services will:

* File a 1099-C Form with the IRS and send you a copy.

* Release your mortgage on the public records.

* Report the transaction to the credit bureaus as "PAID INFULL FOR LESS THAN THE FULL BALANCE."

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