Kristine Dugan, ABR, BS, CRS, SFR
Your Resource for All Things Real Estate
Direct Phone: 702-332-7781 :: Email: info@HomeSearchVegasValley.com
Who Decides if a Short Sale is Approved?
Posted on August 27, 2010
I get asked this question often and wanted to clarity for those who do not understand the layers of decisions that have to be made on Short Sale Transactions... "Who makes the decision to approve or deny a Short Sale transaction when the Owner owes more on the home than it is worth?"
There are three entities that are usually involved in approving a short sale - it gets a little overwhelming for folks to understand but here is it broken down in its simplest form:
1. The Servicer - which is usually who you pay your mortgage to (i.e. Bank of America, Wells Fargo, Chase, etc.) they companies just offer their services of collecting the money on the loan for the investor and charge the investor a fee to do so. Once the Servicer takes their fee from the mortgage payment, the rest of the money is forwarded to the Investor for their return on your mortgage loan. In a short sale, the Servicer is the initial decision maker in approving a file. Once they make a decision on it, they will forward it along to the other two entities - the Investor and the Mortgage Insurance Company (if there is one).
2. The Investor - which has the "financial interest" in the loan. They collect the money that is left over after the Servicer has collected their fees. The investor can be large entities located here in the US like Fannie Mae, Freddie Mac, and some Servicers are the Investor on mortgage loan too (but not too often). Most loans are owned by Fannie Mae and Freddie Mac. Other Investors may include entities overseas that invested in the US Mortgage Market. The Investor has the final decision on the short sale to approve, change terms or decline it because it does not meet their "guidelines."
3. The Mortgage Insurance Company - which has insured your mortgage loan in the case that you stop paying, the Mortgage Insurance Company will pay out a fee to the Investor in order to protect their investment. Not all loans have a Mortgage Insurance Company involved. If there is a Mortgage Insurance Company involved, they have to agree with the Investor on the terms of the short sale. Same as the Investor, the Mortgage Insurance Company has the final decision on the short sale to approve, change terms or decline it because it does not meet their "guidelines".
As you can see, it is much more complicated than just getting one person's approval and each entity is designed to provide a protective layer for all parties involved. If you are thinking about or need to do a short sale on a property you own, make sure you do your homework on the agent that will be assisting you to make sure they understand the layer of entities involved in making the decision on the approval of your short sale. If you need an agent, I am ready to identify all possible options and, when possible, assist in the quick execution of a short sale transaction. Feel free to contact me anytime at Info@ForeclosureSolutionsVegasValley.com.
1. The Servicer - which is usually who you pay your mortgage to (i.e. Bank of America, Wells Fargo, Chase, etc.) they companies just offer their services of collecting the money on the loan for the investor and charge the investor a fee to do so. Once the Servicer takes their fee from the mortgage payment, the rest of the money is forwarded to the Investor for their return on your mortgage loan. In a short sale, the Servicer is the initial decision maker in approving a file. Once they make a decision on it, they will forward it along to the other two entities - the Investor and the Mortgage Insurance Company (if there is one).
2. The Investor - which has the "financial interest" in the loan. They collect the money that is left over after the Servicer has collected their fees. The investor can be large entities located here in the US like Fannie Mae, Freddie Mac, and some Servicers are the Investor on mortgage loan too (but not too often). Most loans are owned by Fannie Mae and Freddie Mac. Other Investors may include entities overseas that invested in the US Mortgage Market. The Investor has the final decision on the short sale to approve, change terms or decline it because it does not meet their "guidelines."
3. The Mortgage Insurance Company - which has insured your mortgage loan in the case that you stop paying, the Mortgage Insurance Company will pay out a fee to the Investor in order to protect their investment. Not all loans have a Mortgage Insurance Company involved. If there is a Mortgage Insurance Company involved, they have to agree with the Investor on the terms of the short sale. Same as the Investor, the Mortgage Insurance Company has the final decision on the short sale to approve, change terms or decline it because it does not meet their "guidelines".
As you can see, it is much more complicated than just getting one person's approval and each entity is designed to provide a protective layer for all parties involved. If you are thinking about or need to do a short sale on a property you own, make sure you do your homework on the agent that will be assisting you to make sure they understand the layer of entities involved in making the decision on the approval of your short sale. If you need an agent, I am ready to identify all possible options and, when possible, assist in the quick execution of a short sale transaction. Feel free to contact me anytime at Info@ForeclosureSolutionsVegasValley.com.
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