What does it take buy a house that is involved in a San Jose Cambrian short sale? Patience and Paperwork!

Patience is required due to the fact that the current housing crisis has created a tsunami of distressed properties that lenders must process. At one meeting I attended recently, is was discussed that each short sale loan processor at one bank had a case load of about 300 loans to work causing much burn-out among the staff and increased response times for document submissions. Yikes! Not a job I would want!

There may be more than one lien holder that must give approval such as

• primary (1st mortgage)
• second ( sometimes a home equity line of credit)
• third (I hope not)
• IRS tax liens, which take about 30 days to get released from a specific property
• other general liens such as judgements and attachments
• mechanic's liens for nonpayment of completed construction (difficult to get released)

The more lien holders there are, the longer the delay for approval and the higher the probability that one of them could refuse the sale. Then the entire house of cards comes tumbling down into transaction failure.

Even if all the time needed is available to get approval, short sale lenders may want documented proof that the buyer is willing and able to consumate the purchase. One prickly issue is that the 1st lien holder lender will most likely want to qualify the purchaser all over again even after qualification with the purchaser's original lender. The simple thing to do is for the purchaser to authorize their lender to send a completed loan application package to the 1st lein holder for their approval. If the purchaser's lender is cooperative, this can all be done painlessly via email.

Which brings up a sticky point: communications with the 1st lien holder lender must be in the manner they specify - if they say FAX then you FAX, if email, then you email, if carrier pigeon, then send via carrier pigeon. Doing otherwise invites risk of document loss and additional delay.

Sigh!