Five Reasons Lenders Reject Short Sales

The lender has the ultimate power to vote thumbs up or thumbs down on a short sale.  Here are five top reasons why lenders reject short sales:

1)  The seller doesn't qualify.  The seller needs to show financial hardship, indicating why they are unable to repay the full debt.  If the seller has other assets that can be used to cover the loan, the lender will likely deny the short sale request.  That may mean submitting profit and loss statements, bank statements and tax returns to prove a financial hardship.   

2)  The offer price is too low.  If the lender believes it can get more through the foreclosure procedure, it will reject the buyer's short sale offer.  For that reason, Team Leung will submit a comparative market analysis and other documentation to justify the offer price.

3)  The monumental amount of paperwork is incomplete or not correctly completed.  This paperwork is very detailed and varies from lender-to-lender.  Kelly Walters, our Certified Distressed Property Expert, has been trained on the nuasances of this documentation to make sure that all the "T"s are crossed and the "I"s are dotted!

4) The buyer may not qualify for the loan.  Just like any other real estate transaction, the buyer's ability to obtain a loan is essential.  As an advocate for the seller, Team Leung will scrutinize the offer to verify that the transaction will not be denied because of the financial circumstances of the buyer.

5) The lender may have already sold the loan to another lender.  Prior to submitting the paperwork for a short sale, it must be verified which lender currently holds the title to the property.  It wastes valuable time to submit the documents to the incorrect lender.