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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That is if you have a Buyer Agency contract. What if you or your state practices subagency? There is no buyer agency and no confidentiality due the buyer.

Terry Driscoll said:
As a Buyer's Agent, the duty of confidentiality is to the Buyer Client, not the Listing Agent and the Seller.  In your story, it was the BA that presumed "if the buyer had seen that letter they would want a better deal on the property" - - what if the letter contained info that the Seller had to bring $5000 to closing - - would the buyer then feel that they should kick in more?  The Buyer shouldn't care what the letter says; they should care that their offer was accepted, the SS was approved (some aren't) and they are getting the house they wanted for the price they agreed to in their contract.  The Buyer Agent can put whatever spin they want on the explanation of the letter to their buyer; I would suggest that, even though the seller is losing their home, at least they will have some cash to re-establish their living arrangements, so this is a short sale approval that is good for all parties. 

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?
My addendum with my Short Sale seller calls to release the sellers Short Sale Approval to buyers lender only. Why would it not be my place to provide it to the buyer's lender if my seller agree's? Why would the BA need to see it?

Ray, you can not put it better my friend, you are totally right.  Hopefully, listing agent doesnt send a mutilated approval to the selling agent!  Just saying!



Ray Snook said:

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.

I always give the buyer's lender the complete approval letter. I and my seller's have nothing hide and want the deal to be completed.

There you go Stephen, I do the same.  I see no point in doing otherwise...


Stephen Shafer said:

I always give the buyer's lender the complete approval letter. I and my seller's have nothing hide and want the deal to be completed.

With the seller's permission, I provide the approval letter to the buyer's lender - not the buyer and not the buyer's agent. 

I guess the listing addendum  is worded differently to the buyers addendum,our CAR  listing short sale addendum makes no mention of short sale approval being sent to anyone - unless I totally missed it!

 

Here in CA. the buyers agent sends the California Association of Realtors short sale addendum with the offer and it states that 

"This agreement is contingent on Seller's receipt of and delivery to Buyer of written consent
 to the Agreement from all existing secured lenders and lienholders."

When the seller signs this in the offer they agree for the approval to be released to the buyer.

Since as listing agent I would not approach a buyer directly, I take this to indicate that the approval be delivered via the Buyers Agent. Once I have done that I have, I believe, fulfilled my duty.There is nothing in the addendum that suggests we should send it to the buyer's lender directly. I prefer to do what CAR tells me I should do - that way I cannot have a complaint made against me to them or the DRE for doing something else!

Since there is controversy over what is the correct, legal and ethical thing to do perhaps CAR and other state associations should re-evaluate their short sale addendums.


Rita Legan said:

My addendum with my Short Sale seller calls to release the sellers Short Sale Approval to buyers lender only. Why would it not be my place to provide it to the buyer's lender if my seller agree's? Why would the BA need to see it?

Would a letter from the title company, saying they are in receipt of the approval letter be enough to satisfy buyers lender?

Whats the big deal? .. is the borrower a celebrity?

Moreover, many lenders insist that they will not START the buyers loan without approval.  This is totally false. They can and will issue a conditional loan approval, with short sale approval being one of the conditions. To delay the start of a loan when approvals are only good for 30-45 days is foolish and dangerous and I will not allow it.

Had a Lender today state that the Seller needed to sign the Approval Letter prior to underwriting granting Loan Approval.

Yes, final approval.  They can grant conditional approval

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