Why the Lender Must Approve an Atlanta GA Short Sale

Why does a short sale listing include the phrase “lender must approve”?

Whether it's an Atlanta GA short sale or taking place in any other state, this wording, or some form of the same, is included in short sale listings to indicate that the short sale cannot take place unless the seller’s lender gives the  green light.  The short sale lender must agree in writing to accept less than the total payoff amount on the current seller's mortgage. Only with this written approval can the property be closed by the new buyer.

But before that approval happens, several other things must also be approved by the lender:

The lender must approve the seller for participation in a short sale.

Often, this approval is contingent upon the type of loan used buy the original borrower (now seller). Another factor will be the presence of a qualifying hardship on the part of the seller. And then there may also be investor guidelines which dictate other circumstances under which requests may or may not  be approved. There may be circumstances attached to a particular mortgage that make it more beneficial to the lender to disallow the short sale in favor of another strategy .

The lender must approve the sales price.

Of course, the real estate market will always dictate what the true value of a property is, but the lender holding the current mortgage still gets to say how much of a loss they are willing to accept on an individual property. Each mortgage situation is unique, and so are the variables which might apply to the discount a lender is willing or able to accept on it.

The lender must approve the contract terms.

All of them. These include all of the financial and physical details of the transaction, including method of payment, proof of funds, time frame for closing, buyer due diligence, and much more.

The lender must approve the disbursement of proceeds at closing.

There are some fairly standard costs to close a real estate transaction that lenders may agree to pay, such as real estate commissions, and fees for closing services.  Only those approved expenses may appear on the seller’s side of the final HUD1.

Whether buying or selling....

The lender must approve an Atlanta GA short sale.

Whether buying or selling....

you may be asked to supply some documentation to assist in this determination process.

The lender may accept the offer as presented, but in some cases there might be a counter back, or even a decline to short sell.

Every case is unique, and every short sale specialist should prepare their clients for any of these possibilities.