This agent says the bank wont ALLOW a short sale?

Question

There's a property listed on the MLS that I've been watching on the market for a while. It's listed at market value and there is no disclosure that specifies it being a short sale or foreclosure. In the agent remarks the agents wrote "VERY MOTIVATED SELLER WILL LOOK AT ALL OFFERS". I gave the agent a call and she explained to me that the owner is a widow & has fallen behind on his mortgage payments.

I give her a verbal offer of 65K cash and she says that's too low he owes more than it's work. I ask her about the possibility of doing a short sale and she tells me the bank won't ALLOW (not to get confused with approve) a short sale.

I'm not very experienced with short sales so can someone explain to me why the bank wouldn't ALLOW a short sale?

P.S I sent a letter to the owner and he gave me a call back telling me he just wants to get out of the property & pay off his mortgage. Maybe the owner is the one that is opposed to a short sale because he feels he can sell the property at market value and pay off the mortgage?

Account Closed · Answer

The bank very well may not allow a short sale.  They may prefer the benefit of having it sold at trustee's sale.  Depends on a lot of things, including the type of loan and mortgage insurance.  There are some special local and state loan programs that make loans to seniors and low income borrowers that may have a no short sale policy.

It is possible that the seller/borrower may to be willing to do a short sale, and the agent misspoke or misunderstood.  A short sale typically requires documentation from the borrower he may not be willing to provide.

If you want to send me the address I can look up the lender and see if it's anything out of the ordinary.