I get a lot of e-mails. I'm sure most of you do too. However, from time to time, I'll click on an e-mail which looks like it may qualify as spam just out of sheer curiosity. This e-mail arrived courtesy of Wells Fargo, a company which is currently processing tons of short sales. It's excerpted below: (italicized bold portions are my additions)
We are committed to accelerating the short sale process. In fact, for those loans we hold in our portfolio, we have already undertaken efforts to streamline the sales approval process. The majority of the loans we service, however, are owned by other investors. So in many cases, Wells Fargo must obtain the approval of the first and any second mortgage investors. Our goal in these situations is to move the process along as quickly as we can.
Is the definition of a binding sales agreement referencing the agreement between the buyer and seller applicable when a bank must approve the sale for the transaction to close? In this case, the e-mail seems to intimate that the binding sales agreement includes their clearance of first and second mortgages.
A subsequent call to another senior loan officer confirmed my uneasy suspicion. This loan officer also agreed with the position that states that the sale is NOT binding until the bank signs off on it! There may be a significant disagreement about what constitutes a binding sales agreement for the purposes of the buyer's ability to legally claim the Tax Credit.
What's at Stake?
For the real estate community, a binding sales agreement occurs when there is a binding agreement between buyers and sellers. The approval by the mortgage company is viewed as merely another contingency to the contract.
If the alternate view expressed by some lenders is ever deemed to be the correct definition of a binding sales agreement, this could prove troublesome for many potential home buyers who are staking their claims on homes which will require short sale approvals that may not be delivered prior to April 30, 2010 although they have an agreement with the seller AND may be able to close prior to June 30, 2010.
What are your thoughts on this? Has anyone explored this issue with the tax authorities?