20 Reasons Why a Mortgage Lender May Deny a Short Sale on a Kansas City Home

20 Reasons Why a Mortgage Lender May Deny a Short Sale on a Kansas City Home

The Kansas City homeowner has determined that they qualify for a short sale because they have a Financial Hardship, a Monthly Shortfall and they’re Insolvent.

Now with the help of a Loss Mitigation Short Sale Specialist, the Kansas City homeowner has listed their Kansas City home for sale and now have a sales contract.

The 19 reasons why a Kansas City homeowners request for a short sale may be denied are:

1) Incomplete Paperwork - The paperwork submitted to the mortgage lender to request a short sale was incomplete. In addition, the mortgage lender may send request for additional paperwork. This paperwork needs to be completed in its entirety before it is sent to the mortgage lender. Mortgage lenders may deny a request for a short sale if the paperwork is incomplete.

2) Unsupported Financials - The financials submitted to the mortgage lender are to demonstrate that the Kansas City homeowner has a financial hardship, a monthly shortfall and that they’re insolvent. If the financials don’t show this, the mortgage lender may deny the short sale request.

3) Optimistic Home Value - The mortgage lender hires an appraiser to determine the home value. If the appraiser submits an appraisal that is to high, the mortgage lender may counter the offer submitted or deny the request for a short sale.

4) Deferred Maintenance - If the Kansas City homeowner has been having problems paying the mortgage, they may have also neglected repair issues around the home. If the repair issues are costly, the mortgage lender may decide to deny the request for a short sale. They may decide to foreclose the Kansas City home and make the necessary repairs then sell the Kansas City home as a REO property.

5) Deny the Appraiser - The mortgage lender will send an appraiser to the Kansas City home to help determine the value. If the Kansas City homeowner denies the appraiser from entering the home, the mortgage lender may deny the request for a short sale.

6) Not Enough Time - The mortgage lender may deny the request for a short sale if there is not sufficient time allowed to process the short sale in the real estate contract.  

7) Sales Contract Not Complete - The mortgage lender will review the sales contract. If the sales contract is not completed correctly with the proper addendums, the mortgage lender may deny the request for a short sale.

8) Incomplete HUD/Settlement Statement - When the real estate contract is submitted, the mortgage lender will want to review a HUD/Settlement statement. If the HUD settlement statement is missing or incomplete, the mortgage lender may deny the request for a short sale.

9) Not an Arms Length Transaction - If the offer submitted is from a family member or friend, the mortgage lender may deny the request for a short sale. The mortgage lender wants a sales contract from a non-relative. They also don’t want to review a sales contract that has the homeowner planning on renting the home.

10) Not Completing Paperwork in a Timely Matter - The paperwork needs to be completed in a timely matter. If the homeowner does not submit the paperwork in a timely matter, the mortgage lender may deny the request for a short sale.

11) Timing - The mortgage lender may deny the request for a short sale if the foreclosure date has already been scheduled.

12) Homeowner Filed Bankruptcy - If the Kansas City homeowner filed bankruptcy, the mortgage lender may deny the request for a short sale.

13) Low Ball Offer - The mortgage lender may deny the request for a short sale if the initial review of the sales contract reveals that the sales price is to low.

14) Inspections - The mortgage lender may deny the request for a short sale if the inspections have not been completed within 15 days of the acceptance of the sales contract. Most buyers want to wait until the offer has been accepted by the mortgage lender. Mortgage lenders want ALL contingencies completed. In addition, the negotiator assigned by the mortgage lender maybe thinking that if the buyer is concerned about $400-$500, then they may not be the most qualified buyer for the Kansas City home.

15) Cancellation - The mortgage lender may deny the request for a short sale if the buyer has canceled the sales contract prior to the mortgage lenders approval.

16) Unrealistic Closing Date - The mortgage lender may deny the request for a short sale if the closing date is to quick. For a pre-approved short sale, the mortgage lender is looking 30-45 days to close. For a short sale that has not been pre-approved, the mortgage lender is looking for closing dates to be 60-90 days.

17) Deny Banks Acceptance - Once the mortgage lender makes an offer, they will expect the Kansas City homeowner to accept the terms. If the terms are not accepted in a timely matter, the mortgage lender will deny the short sale.

18) Additional Liens - The mortgage lender may deny the short sale if there are additional liens. The additional liens may affect the ability to close the sales contract.

19) Uncooperative 2nd Mortgage - The 2nd mortgage lender typically gets pennies on the dollar to nothing. Because of this they may become uncooperative. If the 2nd mortgage becomes uncooperative, the mortgage lender may deny the short sale.

20) AS-IS - The mortgage lender and Kansas City homeowner will not be paying for repairs. The mortgage lender may deny the short sale if there is a request for repairs.

If you need help with a short sale, hire the professionals. The Kansas City Real Estate Network works with homeowners preventing real estate foreclosures.

Written by:
Chris Dowell
Dowell Taggart Team  www.DowellTaggart.com
Kansas City Real Estate Network of RE/MAX Premier Realty

RE/MAX sells more homes than any other real estate company.
For a reason...should we talk?

Blog post written by the Dowell Taggart Team of RE/MAX Premier Realty 

Comments are appreciated! Go ahead and add your 2 cents . . .
We have 3 easy steps to find you the perfect home . Click here to get started, today!