Government Backed Loans May Be Delayed
So you have your approval letter and now you are running into problems with the Buyer’s government backed loan. Whenever you take on a short sale an important consideration is the Buyer and the Buyer’s loan. For example, if the property is in unfit condition and requires some repairs prior to making it livable, the Seller may have to complete the repairs prior to closing or put money in escrow if it is a government backed loan such as USDA, HUD, VA or FHA. This is probably not going to happen in many short sale situations. This would be important to know prior to beginning the short sale trek.
Another issue some of these loans are having is delay. With many of these programs’ administrators furloughed during the recent government shutdown there is now a backlog and probable delay. The problem in a short sale is that the approval letter usually allows for a 30-day window to close. It is paramount for the buyer to be proactive in getting everything into their loan officer as quickly as possible and stay vigilant throughout the loan process in order to limit the delays. If the loan does not close in the time frame allowed in the approval letter then an extension must be obtained. As we have discussed at length in earlier writing this does not always go well.
Bottom line, know that there is a window given in a short sale to close and be proactive in your efforts to get loan approval in order to close in that window.