You are here:

Buying or Selling a Home/Bank approval of short sale offer

Advertisement

Expert: Jim Root - 5/19/2010


Question
I am in contract to purchase a CA home and am waiting for the bank to approve my offer.  Prior to making my "final offer" the seller's agent informed my agent that the bank would not accept anything less than a certain amount.  In turn I offered $4000. over that amount and it was immediately accepted by the seller.  It's now nearly 2 months later and I'm still waiting for bank approval.

My questions are:
1) Since I offered more than what the bank said they would accept, can the bank now demand more money or can I relax and just wait for the bank to run its course?
2) Is there any law that requires the bank to respond to my offer in a specific timeframe?

Answer
Hi BOB--

In a Short Sale, there's usually 3 parties to the sale that must ACCEPT the Buyer's Offer. One is the Seller, the other the Lender, and last-but-not least, the MORTGAGE INSRANCED  PROVIDER or LOAN GUARANTOR.

FHA is a Mortgage Insurance Provider(MIP), VA is a Loan Guarantor.There are Private Mortgage Insurers(PMI)s for Conventional Loans(ie.low downpyments such as FHA's 3% creating a 97% LTV or VA's Zero Down providing a 100% LTV OR a Conventioal Mortgage with 5, 10 or 15% downpaymnt)the Lender has required MIP or PMI be purchased by the Borrower I(now your Seller) to insure them against loss if a foreclosure occurs.

Your Seller accepted your Offer, the Lender, who has likley already spoken t the MIP or PMI people involved with the Sellers loan quoted you a minimum amount the PMI or MIP would accept.

Typically, now that you've gone back with your "upping the ante" by $4000, the Lender and Mortgage Insurance Provider are negotiating over how they'll share the loss that will occur if/when they sell for less than the current loan's payoff amount.

Unlike your Seller, who just wants OUT,both the MIP/PMI folks AND the Lender want to minimize their losses. Sometime it takes months before the negotiations between the Lender and the Insuror or Guarantor comes to a ccompromise agreement.

The Lender COULD ask for more money,if the Mortgage Insurors or Guarantors DEMAND more. I'd say it's unlikley that they will, however, with your generous $4000 increase! As for a legal "timeframe" for their response to your "Counteroffer," the answer is "No, unless you made your writtent Counteroffer of $4000 subject to a specific date that you require of them to respond.This makes it a "contractual matter."

Short Sales are a "Pain in the a#@%&! You now can either wait it out OR see if your CONTRACT provides for you to "pull out" without penalty.Your Realtor or an Attorney should be able to help you terminate if that's what you want to do. If not, just "hang in there!"

GOOD LUCK!

__JIM  

Buying or Selling a Home

All Answers

Answers by Expert:

Ask Experts

Volunteer

Jim Root

Expertise

How to select the right Real Estate Salesperson & Loan Officer--ones who will serve your best interests! House-hunting tips & suggestions on selection of the home best for your family needs. Introduction to the Home Buying Process & all the "Players" involved.What is of utmost important to the Homebuyer? Real Estate Contracts & Negotiations, Appraisal needs, Title Co. involvement, Home Inspection issues& the Closing/Escrow systems, etc. Whatever your question, the answer will follow, whether from personal knowledge or research! Gale, shown here with me, has been a Real Estate Office Administrator, licensed Realtor & has served as my Research Assistant over the years!

Experience

Over 30 years as a "Real Estate Professional." including Real Estate Marketing & Sales, Appraisal work, Mortgage Banking & as a Realty Officer with U.S Dept. of HUD's FHA Homeownership Division in Alaska, Washington & Idaho! Some experience in Montana, California, Utah & Nevada markets!Knowledge of National Markets by continuous Research!

Organizations
Former member of Nat'l Ass'n of Realtors (NAR) & Mortgage Bankers Ass'n of America (MBAA). Currently with National Association of Review Appraisers & Mortgage Underwriters (NARA/MU).

Publications
Published in various local, state, regional & national Real Estate-related magazines & newsletters!Co-author of various Govt. publications on Homeownership, Appraisals & Mortgages while with HUD/FHA.

Education/Credentials
Associate Degree in Real Estate Studies plus: Numerous Real Estate-related Courses conducted by the U. S. Government & Private Industry over the past 30 years. Bachelors Degree in Mass Communications, Masters Degree in Education/Teaching

Awards and Honors
Professional Designations: Certified Residential Originator (CRO) from MBAA, Registered Mortgage Underwiter (RMU) & Certified Review Appraiser (CRA) from NARA/MU. Outstanding Peformance Awards for 10 of the 12 years with HUD/FHA & numerous Sales/Listing Awards while a licensed Real Estate Agent.

Past/Present Clients
No longer selling/listing Real Estate, nor Appraising properties, nor working in the Mortgage business, this "Real Estate Pro" serves as Director of a Company that provides Professional Development Seminars & Workshops to the "Real Estate Industry" and provides free (as needed) & fee-paid (on a sliding scale) consulting & inspection services to members of the general public.Your questions will be answered without "salesmanship" & with your best interests in mind!

©2012 About.com, a part of The New York Times Company. All rights reserved.