Hello all and happy Holidays.

 

Is the buyer entitled to see a copy of Fannie Mae approval letter??  I feel like before going forward with home inspection and such that a copy of the approval should be provided.

 

My daughter is involved in purchasing a short sale in Green Bay, WI .  Offer submitted at $140,000.00  and offer was accepted in May.

 

Loan package was submitted (finally) to Fannie Mae in November and it was rejected with Fannie Mae saying they wanted $170,000.00 for the home and my daughter does not come close to being qualified to purchasing at that price.

 

Realtors told my daughter it was simply a formality to resubmit at $140,000.00 and Fannie would approve.  Paper work was updated (amendement to offer extending closing date, etc.) and Fannie rejected again at beginning of December saying they want $170,000.00.

 

My daughter asked for her earnest money back and several days later the realtor contacted her saying Fannie had approved sale at $140,000.00.  The realtor wrote another amendment extending closing to 12/31/2012 and instructed my daughter to order home inspection which my daughter must pay for ($300.00 cost). 

 

My daughter has asked several times to see the Fannie Mae approval letter as has her lender and the realtor keeps putting both of them off.  My daughter is only trying to be sure she does not incur an unneccesary inspection fee. 

 

In addition sellers of the home have now had to vacate due to foreclosure and home was winterized which Realtor just told my daughter on 12/14.  And my daughter was told by realtor that she must pay to have home de winterized which must be done before inspection.

 

Thanks in advance for any advice

 

 

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In PA, the Title company must receive a copy of the Approval Letter and also the buyer's Lender will need to see a copy of the Approval Letter. This information is always shared with these 2 companies. If the Listing Agent is not providing written documentation to your Title Agent, I would be wary of moving forward. If they cannot provide this document, you do not have a written approval on the contract. As far as getting the deposit back, read your agreements/contracts. They should have addressed this issue and provided a date in which the contract expires. [email protected]

Things definitely don't sound right with this.  If the listing agent performed a valuation dispute, it is possible that the approved price dropped.  However, that's a big drop.  Whether or not you are entitled to a copy of the actual letter depends on the state  in which the home is located.  But in any state, you are entitled to a WRITTEN notice of approval.  If you haven't received anything in writing, that's a big red flag.

With respect to the sellers vacating the home, there is no requirement to vacate until the home actually forecloses, and at that point, the short sale would be voided anyway.  Sounds like you are working with a listing agent that hasn't been forthcoming with you. The sellers should have been more diligent, but they weren't and there's not much you can do at this point.  

Ask your agent to talk to his/her broker and contact the listing agent and/or his/her broker and get to the bottom of it.  Turning on the utilities and getting the home de-winterized is a cost, but if she's getting the home for $140 and the market value is $170, a $300 inspection and de-winterizing are small expenses to pay to get such a deal.  

Think big picture and try to keep the emotion out of it.  Make sure everything is in writing and yes, tell the Listing agent to send the approval letter to title immediately so that you can verify with them that the final purchase price is $140.  But, also be wary if you are working with a small, local title company chosen by the seller/listing agent.  Make sure you get anything from title in writing as well.  

They buyer's lender should be asking to see a copy of the short sale approval letter. If I were the realtor I'd be asking for it to be sent to them, if the other party is not cooperating. Did the buyer have an appraisal yet? Without seeing your contract and how it is written, I can only guess. I don't want to do that. Have your daughter contact her realtor and ask to set up a meeting with the realtor and the broker so that things can be clarified. If the realtor won't do that have your daughter contact the broker herself and set up a meeting. There is something not right.  If you go to Fannie Mae's website, you can see if this particular home is in the process of being transfered to them - it will say "coming to them" Also, you check the court records and see if there was / is a sale date set for that property, or if the title has transferred.

The Title company and the buyers lender will need the letter to move forward.  Your daughters agent will need to ask for it in writing so the other agent will have to respond.  In addition, the Title Company can call as well as the lender.  I would ask the seller to sign off on the letter so the buyer knows that the seller will accept all conditions.  Good luck!

I don't share the approvals with the buyers. .after all, this is not part of a contract between buyer and seller. .A short sale approval is between the lender and the seller and no one else. .. a REMOVAL of the short sale contingency Addendum  is used to assure the buyer that is a go from that point on. ..

Fernando,

The contract between the buyer and the seller says it is contingent upon short sale approval.  The buyer and his agent needs the short sale approval as part of the file.  The buyer's mortgage company needs the short sale approval to give the buyer a mortgage.  The buyer's title company or attorney, whoever is doing the title, needs the approval letter as proof of satisfaction of that mortgage in order to grant clear title.  You can't close a short sale without providing that information to the buyer's side.

Fernando,  With due respect, in YOUR State it may not be a requirement to provide a copy of the approval to the Buyer but that's not true in every state.  In CA for example, our contracts require us to provide the Short Sale Lenders Approval Letter to the Buyer.

 Tell her to RUN and don't look back. BUT LOOK AT HER CONTRACT WITH THE SELLERS AGENT FIRST THOUGH!!!!

This situation is all to similar to what I'm going through. I'm the seller and my agent has already sucked in 3 buyers that they gave similar stories to. With the last one, they told both of us there was an approval, blah, blah, blah, but after digging into it with Wells Fargo, my agent never even submitted the purchase agreement, His contract also has both buyer and seller bound and cannot get out for 6 months without losing earnest money, or having to pay their hourly costs on my(sellers) part if I decide to find another agent. On another offer, the contract did finally expire, but my agent refuses to process the mutual release. At this point, he's holding earnest money from two offers that died, all while I signed a purchase agreement with a third. Only after signing this latest offer did I find out the mutual releases from the others have not been processed. Very bad situation to be in!!!! I filed a complaint with the Better Business Bureau, but my agent claimed buyer/seller decided to fight it out in mediation, which is absolutely false. BBB bought his story. Now we're at the Attorney General stage. Getting very ugly. Again, tell her to run, but be very careful!!!

 I don't know how true this is, but I've been told by multiple sources that many short sale specialty agents have been black balled by FHA and such, including my agent and are still taking on cases with little to no hope of being approved. Didn't believe it at first until I saw that he's operating under two other names in the last month for new clients. Hmmmmmm??? 

Jim,

It sounds like your agent is acting fraudently, IF what you say is true.  I find it hard to believe a buyer's agent, if there is a different one, would allow a buyer to be committed to a purcahse agreement for 6 months!

I'm a Realtor and a short sale negotiator, representing both sellers and buyers. I would straight up fire your agent/broker.  I would talk to the Broker first.  The broker will have licensing issues if they are not properly releasing deposits.  I don't believe your agent could prevail in any action, nor would he try, due to his conduct regardles of any ridiculous terms he imposed on you.  Your agent sounds like one of the old Modification Scam guys.  These kinds of guys make my blood boil, and cast a cloud over the rest of us who try to do it right.  And please, file your complaints with your state real estate commission, and state licensing board who actually regulate this guy.  The BBB is irrelevant in this.

If you have a purchase contract in place, it's trickier, but I'd talk to the buyer's agent, tell them the situation, find a different listing agent, and talk to a closing/short sale experienced attorney.

If what you say IS true, feel free to private message me.  I won't charge you anything, as  others here wouldn't either.  Agents like this need to be exposed, put out of business, then shot!

 Unfortunately it is very true. Most local agents will not do business with him because of his terms. Others find out the hard way. sellers also, like me. He is one of those scams. We signed a 50 page contact with him for his short sale services and his claim is that contract supersedes the standard regulations and Real Estate laws here in Michigan. His only accreditation with his short sale side of the business is with some odd-ball board that agents told me him and some of his scam buddies formed. I tried filing a complaint with them. Absolutely stonewalled. And come to find out, there is a release and binding arbitration clause in there that makes separating from him very tricky. I have consulted an attorney. Most want $2500-3000 to get me out of his contract. I don't have time or the money though. He's already threatening to bill me hourly for breaking the arbitration clause by filing the BBB ad AG complaints. Really nice guy!

 The hang-up on the deposits has been that the buyers agent is barred from communicating with the seller directly. Fortunately, I assumed the releases were sent to them and decided to call the buyers agents since my agent hasn't spoken to me in 2 months. They both said they've been requesting the release or status weekly for months to no avail and were ready to pursue it in other means.  

 Waiting on the Attorney Generals opinion. Can take 30 days and only have until February 13 before my redemption period expires after I was foreclosed upon for my agent failing to send in the PA and sign the Short Sale Addendum for over a month, They did send it in finally 5 days after my home was sold at sheriff sale. Whoopee!! An absolute MESS!!! I almost pray for Feb 13 to get here. :(

 Thanks much for the offer. Are you an agent or attorney? 

I am not licensed in Wisconsin so this is not Real Estate Advice and you should always consult with an attorney on these matters.  In CA, the Purchase Contract on Short Sales REQUIRES the approval letter or "term sheet" be provided to the Buyer - without it the buyer does not have to conitnue.  I suspect you have a contingency or two that allows you to walk away.  For example, does your daughter's lender want a copy of the approval as a condition of her getting financing?

A legitimate Listing Broker will be transparent and provide the approval (with personal info redacted)

 

As others have said, this smells and it's not good.  Let us know how it turns out.

You will hear many horror stories in response to your situation.  Please keep in mind that what has happened to others, may not happen to you .... or it may.  Be diligent in your processes.  Get everything in writing.  If the agent is not supplying you something (either a copy of the approval letter, a release of the short sale contingency, or written notice of approval), it might be time to reconsider this purchase.  But before you jump to that decision, please contact your agent, your agent's broker and work through them to get to the listing agent and find the truth.  

Please also keep in mind that short sales are a specialist part of real estate.  Just as you would not go to a podiatrist for heart surgery, not all Realtors are qualified in short sales -- whether the listing agent or the selling agent.  The agent representing the buyer must (must) understand the short sale processes in order to properly represent the buyer.  If they don't, they need to go to their broker or another agent in their office for help.  Ask your agent if he/she has done this.  If they haven't, it might not only be time to reconsider the purchase of the home, but the person helping you do it.  

The question that's been bothering me a bit is why the offer was $140 and the bank countered at $170.  That's something that happens in Phoenix, as we increased in value over 27% last year.  But if your daughter was not provided a market analysis, and an understanding of what banks will accept as purchase price versus value, she should have been -- at the beginning of this process.  This is a critical part of representing a short sale buyer or seller.  Just because the home was listed at $140 doesn't mean that the bank will accept that price.  Many uninformed and inexperienced agents under price their short sales, thinking the bank will take less because it's a short sale.  That used to be true, but not so much anymore.  The banks (in general) want to net a certain percentage of the market value.  It's a numbers game to them, and if the numbers are off from the onset, the short sale will likely fail.  

I wish you the best of success.  

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