Top 5 Reasons Why Lenders Reject Naperville Short Sales
No one knows if a Naperville short sale will be
approved or rejected by the lender, not the Naperville short sale agent, nor
the buyer.
A seasoned Naperville short sale agent with lots
of experience in successfully closing short sales can probably tell you if your
short sale will be approved or not, but the lender or bank has the final say.
When a home is listed as a short sale, this does not mean it is an approved short sale. It
can mean that the Naperville short sale agent and the seller hope that the bank
will approve the short sale once an offer is submitted.
Here are some reasons why lenders reject
Naperville short sale requests:
1. Offer price
for the short sale is too low. Lenders
request their own appraisal to be done on short sale properties and may also
order a BPO (brokers price opinion). Your Naperville
short sale agent should submit a comparative market analysis
along with the short sale offer to justify the price of the short sale offer.
If the lender feels they can cut their losses more by taking the home through
foreclosure, the lender will reject the short sale offer.
2. Incomplete
short sales package. The seller and their agent may have submitted a
complete package, however occasionally the bank misplaces some of the
submitted documentation. Without every
single document, the short sale will not be approved. Make sure to ask the bank
for a list of documents and have your Naperville short sale agent go through
your short sales package once you have gathered all the required documentation.
Make copies of all the documents before submitting it to the lender.
3. The seller
is not qualified for a short sale. The seller may
have an invalid hardship like an expensive purchase or a family vacation that
depleted their savings. These situations are avoidable and controllable
so the bank does not consider it as valid hardships to approve a short sale. If
the bank sees that the seller has remaining liquid assets from their financial
statement, they might disapprove the short sale since they will feel that
the seller still has the capability to pay the mortgage.
4. The buyer
is not qualified for a loan. It is not
enough that the buyer is willing to purchase the short sale home. Willingness
does not necessarily mean the buyer is financially capable to buy the Naperville
short sale property. Before a buyer can get
approved for financing, the buyer’s lender will review the buyer’s credit
history, debt-to-income ratio, length of time in present employment, and
several other factors to determine if they are qualified for a loan. Buyer’s
should submit a prequalification letter from their lender along with the offer
to be submitted to the seller’s
lender, who will decide whether or not to approve the short sale. A significant
earnest money deposit will also show a buyer’s commitment in closing the deal.
5. The lender
has sold the mortgage.
There are some cases when, in the middle of the short sale
negotiations between the bank and the Naperville short sale agent, weeks have
passed before the agent finds out that the bank no longer owns or services the
mortgage loan and the bank has sold it to another lender. This means the first
bank no longer has authority to approve a short sale since it has already
released the asset. It is also possible that the bank is still servicing the
loan but no longer owns it. Make sure your Naperville short sale agent
clarifies with your lender who owns and services the loan before going further
with the negotiations.
Now that you know the top 5 reasons why banks
reject Naperville short sales, you can avoid them by careful planning,
preparation, and communicating with your Naperville short sale agent.
If want to do a short sale in Naperville to avoid foreclosure, please contact certified Naperville short sale agent Teresa Ryan on 630-276-7575 for a free consultation.
Teresa Ryan
Broker/Owner, CDPE
Ryan Hill Realty
1001 E. Chicago Ave., Ste. 103
630-276-7575
