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Saying “NO” is Easier than saying “YES” in a Short Sale

The Loan Servicer (Wells Fargo, BOA, Mr. Cooper, Ocwen, SLS, SPS, DiTech, etc…) cannot get in trouble for declining a short sale. The Loan Servicer, however, can certainly get into what may become some rather expensive trouble for approving a short sale improperly. The file will likely be audited sometime in the future and the Loan Servicer will be held responsible for any decision to approve a short sale that may be outside the investor’s guidelines (i.e. approve an offer below the sold comp range). Remember that the Loan Servicer does not own the loan but instead is in a fiduciary position to the investor (Fannie Mae, Freddie Mac, FHA, VA, USDA, Conventional) and must follow the strict guidelines set out by the investor.

The most prominent guideline from all of these investors is that in order to approve a short sale the offer price must be a “market price” offer within the sold comp range. Most Buyers have the mindset that if a foreclosure is filed then the Loan Servicer will take a low-ball offer. What they don’t realize is that the Loan Servicer does not care if it goes to foreclosure so that logic is ill placed in a short sale and results in a great deal of time and energy wasted chasing rainbows. The offer still needs to be a market price offer within the sold comp range whether the property is in foreclosure or not.