The American consumer is being introduced to a new, shiny, unicorn.  As a part of the Attorney General’s settlement with 5 major loan servicers – Bank Of America, Wells Fargo, Citi, Chase, and Ally (GMAC), new short sale guidelines are being rolled out that will (supposedly) speed up the short sale approval process.  Currently the five servicers listed have pretty horrible track records for short sale approval time lines.  The long time lines for approval increase the likelihood that viable buyers will walk away from the transaction and the property will end up in foreclosure. 

Here are the new guidelines:

1.  Servicers must provide borrowers with a short sale decision within 30 days after receiving a short sale package request.

2.  Servicers will notify borrowers, also within 30 days, if documents are missing from the short sale package.

3.  Servicers must notify the borrower immediately if deficiency payments will be required.  An estimate of the deficiency amount must also be provided. 

4.  Internal groups at each servicing institution must be formed to review all short sale requests.

5.  Banks will be considered in violation of the settlement agreement if more  than 10% of their short sales exceed the new time lines.  A fine of up to $1 million and up to $5 million for repeat offenses. 

It is important to remember that only the 5 servicers listed are required to participate in these new guidelines.  What is unclear is how 3rd party servicers for these 5 banks will weigh into the equation.  Bank of America has begun to unload many of their defaulting loans to Green Tree Servicing.  Green Tree does not participate in the new guidelines or any of the short sale transaction management systems Bank of America has in place. 

This isn’t the first time we’ve seen short sale guidelines handed down to banks.  HAFA unveiled their guidelines in 2010 and not many short sales have adhered to the time frames outlined in the program.  Heck, many borrowers who qualify for HAFA are being turned down for the program with little to no explanation from the bank. 

It will be interesting to see how this all pans out.  Actually getting a servicer to adhere to these guidelines may be as allusive as capturing a unicorn.  I’m participating in my first short sale under these settlement guidelines.  So far so good, but the 30th day is still a week away.  I’ll keep you posted.

A frequently asked questions I get is, “Why does short sale approval take so long?”  Many consumers, and real estate agents, are confused by the term “short sale.”  They think the “short” refers to the time frame.  Well, it doesn’t.  “Short” refers to the fact that the lender will be “shorted” the amount that they are owed.  It will and does take time for banks to decide if they are in the position to let you short sale your home.   

One of the largest factors in the short sale timeline is the number of people involved in short sale approval.  Many are under the impression that the bank’s short sale negotiators are also decision makers.  They aren’t.  Negotiators are just what their title implies, they negotiate on behalf of the bank.  It is their job to get the highest possible sales price for the property in order to help the bank mitigate loss.  If the numbers that are turned in by the seller and listing agent don’t make good business sense for the bank, the negotiator will reject the contract or negotiate more favorable terms.  You can cut down on approval time by making sure offers to the bank make sense.  The less negotiating the negotiator has to do, the quicker the decision maker will get the short sale package. 

After the negotiator has reviewed and accepted the terms of the contract, the package moves on to a supervisor.  The supervisor will review the package again and decide if the package should be elevated to a group of decision makers.  This is where the process gets held up.  The decision makers aren’t sitting around waiting to review short sale packages.  They have other jobs and duties.  Decision makers meet at regularly scheduled meetings and review a large number of short sale packages at once.  They will come to an agreement on how each package should be handled.  Some are accepted as-is and an approval letter can be issued.  Some packages require more negotiations or contingencies and add to the timeline for approval.  Once the defaulting seller agrees to the approval of the short sale or the counteroffer from the bank, the package is sent to a higher ranking official within the bank to get a signature of approval.  This is when, and only when, you have complete short sale approval. 

So, those are the key players in the short sale approval timeline, but what else can hold up the process.  A newer player has appeared in the short sale game, the servicing company.  Servicers are different than originators.  Servicers have no authority to modify loans, refinance properties, or approve short sales.  They act as a 3rd party for banks as debt collectors or short sale negotiators.  If your short sale is being handled by a servicer, you have just added another entity to the process, thus increasing the time frame it will take for approval.  The servicer can preliminarily accept terms for a short sale, but still need the originator to sign off on the approval.  In the meantime, the loan can be sold to a new servicer and the process has to be started all over again.  It becomes a vicious cycle. 

A third factor that holds short sale approval up is banks are only open 5 days a week, if we’re lucky.  The time it takes to review a single short sale package is staggering.  Add to that the number of short sale packages a bank receives, the number of man hours a bank dedicates to short sales, and the number of packages that are turned in with inaccurate information, there just isn’t enough time in the day to make this process more efficient.  Efficiency depends on the human element, and let’s face it, humans are not efficient.  The short sale approval process is based on a system of steps that must be completed before the next step can be started.   These steps are only reviewed Monday through Friday, during normal business hours. 

Examining short sale approval timelines requires you to look at this type of transaction from a business perspective.  We have to remember, short sales are a privilege, not a right.  Earning this privilege takes time and due diligence.

Pitfalls of Highest and Best Offers

The Fredericksburg area real estate market is definitely heating up.  With a hopping real estate market comes less inventory, multiple offers, and more competition.  Today’s housing inventory is moving fast, and buyers need to be wary of writing offers they may not be able to close. 

It’s 2012 and banks are getting wise to pricing and negotiation tactics.  Banks are also sick of hemorrhaging money and need to find a way to stop the excessive bleeding.  A not-so-new tactic for pricing properties has emerged, list it low – sell it high.  Yes, sellers are actually listing their homes at low prices in hopes of garnering multiple offers and creating a bidding frenzy, thus increasing the sales price.  This is wreaking havoc with buyers and buyer’s agents.  After several years of properties being listed at reasonable prices, buyers are falling for this marketing trap.  They see a home listed for $260,000, fall in love with it, write an offer, only to find out there are 6 other offers and the seller now wants the “highest and best” offer.  Keep in mind, this is not just a bank tactic, but short sale sellers and traditional sellers are now playing this game.  

If a buyer is making a decision based on their emotions, they may be tempted to bid higher, even higher than proven market value (recent solds in the area).  This can lead to some pretty serious problems.  If a listing is a short sale, the offer the seller accepts may not be an offer the bank is willing to accept.  A property may be listed at $260,000, gets a ”highest and best” offer of $285,000, and the bank comes back and says they will only accept $295,000 to allow the short sale.  That’s a $35,000 difference between the list price and what the bank will accept.  Or, what if the bank accepts the $285,000 price and then the appraisal comes in at $275,000.  How is the buyer going to make up the difference or do they really expect the bank to lower their expectation… that the buyer set by offering such a high sales price. 

This is a foreclosure problem, as well.  Many banks are now making buyers who write offers over list price sign an addendum that states the buyer is responsible for any difference in contract price and appraised value.  But wait, the bank listed the foreclosed property at a low price in hopes of getting higher offers.  And, the bank put the perspective buyers in a “highest and best” situation.  Yes, yes they did.  The bank is trying to mitigate loss.  Your high offer is helping them do just that.  (Also, please pay your taxes so banks can get more bail out money).   

Ultimately, it is the buyer’s responsibility to make sure they are writing offers they can follow through on.  It is also the buyer’s responsibility to make sure their offer price is within market value and that the home will meet lending guidelines.  A good buyer’s agent will walk you through the pitfalls of “highest and best” offers.  A great buyer’s agent will help you decide if you are even eligible to play this high stakes real estate game.

So, whose market is it anyway?  Is it a buyer’s market?  Or, is it a seller’s market?  I’ve been saying it for 4 years now, it’s neither.  It’s a bank’s market.  This is not to say that banks are coming out rosy in real estate transactions.  Many banks are still losing money on individual transactions., even if their reported earnings include profits.  However, in a market that consists mostly of short sales and foreclosures, banks have the upper and.  On the selling end banks set the price they will accept for the sale and on the buying end banks order the appraisals and decide if the property is a good investment.  With the majority of the transaction in the bank’s hands, it’s a bank’s market. 

If banks have so much power, how much can you negotiate when trying to purchase a home?  I’m going to go ahead and lay this out there, this country has lost the fine art of negotiation.  Most consumers are looking for a “win.”  Very few consumers know how to pinpoint their breaking point when it comes to purchasing and even fewer can determine the seller’s breaking point.  Without these skills, negotiations can go south fast. 

The first step in negotiating real estate is figuring out, as the buyer, how much you want the property.  Your desire to obtain the property will determine your starting point. 

The second step is determining what comparable properties are selling for in the neighborhood and area.  Some real estate agents will price a property well under comparable sales in hopes of obtaining multiple offers.  When in a multiple offer situation, be wary of relying on being the highest offer.  The home will still need to appraise.  Highest is not always best.  On the flip side, if a home is priced much higher than comparables, it may be signalling an unreasonable seller. 

The third step is investigating the other conditions you will be including in your offer.  If you want a home inspection and expect repairs to be made, you may want to consider offering closer to market value.  If the property is sold “as-is” you need to weigh how many apparent repairs are needed in to your offer price.  Many “as-is” properties are priced with needed repairs taken in to account.  It is also important to remember that “as-is” means “as-is.”  The more conditions/ contingencies a seller sees, be it a bank or consumer, the less likely they are to favor your offer. 

After compiling all of this data, make an educated offer.  Real estate is not a game, especially if you really want the property.  If you treat it as a game, you may come out on the losng end more times than not.  It’s much harder to resubmit an offer once a seller rejects an initial offer or is offended by an original offer.  I’m not saying give the seller exactly what they want, but if their listing makes sense, make sure your offer makes sense, too.

I get a ton of emails from all over the United States regarding short sales.  In most of the emails I am referred to as a “short sale expert.”  I always cringe at this term.  “Short sale expert.”  BLECH.  What is that anyway?  I also find it fascinating that any real estate agent would want to be referred to as a short sale expert.  The term “expert” should just be abolished from the real estate industry, in general.  With today’s market, it is very hard to be an expert.  The market changes daily.  The rules, if they are being followed, are changing as fast as the banks change ownership.  Calling yourself an “expert” is just asking for a lawsuit or a licensing complaint. 

When ever anyone claims to be a “short sale expert” there are a few questions you need to ask.

1.  What qualifies them as an expert?  – It’s easy to put “expert” after your name.  But, what makes you an expert?  Is it the number of successful closings?  Number of listings taken?  Did you earn the word “expert” by taking a class, getting certified, or obtaining a designation? 

2.  How many short sales have they closed? – You can’t be considered successful as a short sale agent unless you are closing short sales.  What type of short sales are you closing?  What!?!  There are different types of short sales!?!  Yes, there are.  Each bank has their own guidelines, each investor has their own guidelines.  Loan types handle default differently.  Handling a VHDA short sale is much different than handling an interest only, investment property short sale. 

3.  How many short sale listings have they taken?  – If an agent has listed 100 short sales, but only closed 20, there’s a problem.  They aren’t a short sale “expert”.  They are an “expert” at listing short sales.  There’s a difference.  Listing/ Closing ratio is important with this type of transaction. 

4.  Who negotiated the short sale?  – I’ve noticed a trend that many “experts” aren’t actually negotiating their short sale listings.  They are hiring a 3rd party to negotiate for them.  I often question how they can claim being an expert.  The hardest part of a short sale transaction is negotiating with the bank.  There is no magic algorithm for getting a short sale approved.  If there was, a computer program could negotiate for you.  That would make real estate alot easier! 

In my opinion, any one claiming to be a “short sale expert” is just trying to sell you something.  You might want to purchase a bag of colorful beans while you’re at it.  Short sales are a complicated real estate transaction that shouldn’t be taken lightly.  Being an “expert” doesn’t get you results.  Working this type of transaction continuously can increase your likihood of success.  Experience increases your liklihood of success.

I spend a few hours each day answering questions and engaging on social media sites.  About 50% of what I read and write have to do with personal matters.  The other 50% deals with real estate.  Recently I’ve been paying attention to conversations across the nation regarding the distressed real estate market.  I am absolutely amazed at how many consumers are being advised by people who do not have a real estate license.  Sure, anyone can read the paper and come up with their own opinion of what is working and not working.  Some people have some knowledge of the market due to their personal experiences as a distressed property owner.  But, unless you are in the field showing houses, writing offers, and negotiating contracts with buyers/ sellers and banks, you really don’t have a complete concept of what is going on out there.  Anyone can watch from the sidelines and critique, but few actually jump in and get their hands dirty.  I guess this is the case for most industries.  Armchair quarterbacking is the American way.  However, armchair quarterbacking in real estate can be dangerous and illegal.

So, how can you protect yourself as a consumer?  Well, Google is your friend!  Every state has a database of real estate licensees that can be accessed by the public.  Generally you can Google, “[state] real estate license look up” and the database will be on the first page of Google.  Virginia’s license database can be found here.  You will need to know the name of the person you want to look up.  As an added step, once you find out if the person has a license, it is good to Google their full name, First/ Last and First/ Middle/ Last to see what they’ve been up to the last few years.  It’s always neat to go look toward the back of the google pages, where information gets buried. 

All in all, you shouldn’t be taking real estate advice from people who aren’t actively involved in the real estate profession.  Real estate is state specific and very local.  Just because someone stayed at a Holiday Inn doesn’t make them qualified to give real estate advice.

So, we’ve gone over what properties qualify in the proposed guidelines, how the bank will qualify a seller to be in the program, and the rules and regulations the banks will have to follow if they choose to be in the program.  Now, I’m gonna get down to the problems with this document and its implementation in the real world.  (You know, the place where we can’t pay our mortgages with kittens and rainbows).

1.  This program assumes that the banks are capable of meeting these timelines with the amount of faulty loans on their books.  That, my friends, is just crazy talk.  Some of the little banks may be able to meet the expectations outlined in this document, but the big boys will never be able to hold up their end of the bargain.  First, these banks are horribly under staffed in their loss mitigation departments.  Why?  Well, who wants to work in a loss mitigation department?  You get yelled at all day and get the joy of working with emotional train wrecks.  Employee turn-over is extremely high in these departments.  So, the banks will have to hire more employees to handle the amount of short sales that will be requested and processed.  Where are the banks going to get the money to not only pay these new employees, but train them adequately to do the job effectively?  Oh, that’s right, bail out money… cause we know the CEOs will not be foregoing their bonuses to make the banks work more smoothly.  Another problem in the this arena is that the banks are being asked to hire more people to facilitate this program and the bank’s benefit is $1000 a transaction.  Ummmm… $1000 a transaction does not offset the cost of an employee.  It seems that from this perspective the banks have very little incentive to participate. 

2.  Yes, I said participate.  This is an OPTIONAL program.  Banks had until the end of December to alert the Treasury Department that they would be participating.  I’m surprised we all didn’t get trampled in the mad rush to sign up.  (sarcasm)  Many of the larger banks are working on streamlining their own short sale process that is advantageous to their bank.  Why on earth would they participate in a program that limited their ability to recuperate funds?  Now, I’m not a business major, but I don’t think banks are in business to lose money.  And at this point in history, they are trying to mitigate their losses.  The $1000 participation bonus just isn’t enough incentive to take bigger losses by not being able to go after the defaulting borrower civilly.  The guidelines state the the lien holders must fully release the borrower from future liability for the debt.  At some point consumers need to held responsible for taking out risky loans.  Houses are one of the few products that people purchase and expect to be able to sell it at a profit.  When we buy a car, we expect to sell it at a loss.  When we buy a tv, we expect to sell it at a loss.  Investments are risky and there are no guarantees.  Again, it just doesn’t make sense.

3.  The banks are all expected to have the same standard process, the same documentation, and the same timeframes.  We might as well all take jobs herding cats.  Banks don’t even understand their own paperwork, much less buearocratic paperwork.  And, what happens to all of the short sales that are currently in the system?  Do we have to start all over? 

4.  One of my favorite guidelines is that REALTORS(R) will be expected to pay the cost of any contractors the banks hire to help facilitate the process.  Well, thank you Treasury Department for telling the banks that they can no longer cut reasonable commissions, but allowing them to charge me to do THEIR job.  Loss mitigation departments are already under staffed so we can safely assume that banks will need to hire contractors to facilitate these deals.  And, Yay!  I get to pay for that.  Well, I’m here to tell you, I WON’T pay for a bank to hire someone else to do the job they should be doing.  I didn’t give out the bad loan, I didn’t default on the mortgage, and I’m not responsible for the economy tanking. 

5.  The guidelines also state that transferring all of the documents through electronic means could be a problem.  They haven’t quite worked this detail out, but I’m sure they will before the program really takes effect in April.  (sarcasm)

6.  One of the biggest problems I have is that banks will be establishing the minimum net they are willing to take on the property BEFORE the property is under contract.  This can cause huge problems.  I recently had a short sale where the bank insisted on a net.  The purchase price had to be $410,000 to meet that net.  The house appraised at $400,000.  The bank demanded the purchaser pay more for the house than what it was worth by bringing $10,000 in cash to the table to make up for the difference.  Isn’t this type of behavior what got us into this mess?  The market bears what the market bears.  I don’t see banks brushing up on market data and conditions for every area that they have loaned in.  They are doing short sales to mitigate loss.  That’s what they will do, regardless of how it effects the consumer. 

7.  One of the funnier guidelines in the document is that properties that can qualify for the HAFA program should have also applied for the HAMP program.  The HAMP program is the loan modification program.  What a successful program.  (sarcasm)  How many loans have been successfully remodified?  How many homes have been saved from loan remodification?  Maybe a handful.  Loan remodification only allows to the banks to adjust their numbers and the borrower to postpone a short sale or foreclosure.  It is not the end all, be all answer to our problems.  It is band-aid. 

These are the points that I see wrong with this document.  I know that NAR and many designation and certifications for REALTORS(R) are touting this document as the glue that will bring the real estate market back together, but I can’t agree with them.  I think this document gives false hope to consumers and REALTORS(R).  I think it is pretty poorly thought out by individuals who aren’t dealing with the consumer side of short sales.  I think the document means well, but all in all, it’s a waste of paper.  I wanted to explain the document so that everyone would start thinking about what changes, if any, this will bring to the real estate market.  Let me know your thoughts.  I’d love to hear them!

In Part 1, I addressed which properties qualify for the proposed program and how the bank handling the short sale will determine if the borrower (seller) is eligible.  This post will deal with the process the banks will be required to go through once a contract is received on a property approved for a Short Sale. 

Imposed Guidelines on Banks for Approving a Short Sale Transaction

1.  Loan servicers must determine, with their investors, the minimum net proceeds that will be acceptable .  They must determine this before the Short Sale is started.  This amount is what the bank wants to walk away from the deal with. 

2.  The loan servicer and investors must also determine the amount of transaction costs they will allow.  This includes paying for buyer closing costs, paying for HOA documents, and the cost to the seller for closing the transaction. 

3.  The servicer must provide the borrower with a Short Sale Agreement.  The Short Sale Agreement outlines the roles of everyone in the transaction and key marketing terms.  Some terms of the Short Sale Agreement include:

• Price
• Proceeds
• Duration of Listing – not to be less than 120 days
• Listing Agent must be regularly doing business in the community the property is located in
• Either the bank approved list price or the acceptable amount the bank is willing to net from the sale
• Closing Cost amount that will be allowed by the bank
• Commission to be paid to REALTORS(R) - not to exceed 6%.  The REALTOR(R) may have to pay the bank contractor hired to facilitate the transaction for the bank out of their commission. 
• Any cancellation or contingency clauses
• That the transaction must be arm’s-length.  The property can also not be resold within 90 days
• The borrower is released from all liability of repayment of the 1st mortgage lien
• Borrower is entitled to a relocation incentive of $1500 – this is deducted from the gross sales proceeds
• Whether a portion of the gross sales proceeds are to be paid to subordinate lien holders in exchange for a release and full satisfaction on those liens
• Any income, tax, and credit consequences of the Short Sale
• Monthly mortgage payments during the short sale process will not exceed 31% of borrower’s gross monthly income
• Clause that if the borrower participates in the program, the bank will not foreclose during the duration of the program
• Any terms of termination

4.  The borrower must submit a request for Short Sale approval within 3 days of ratifying a contract.  The request must include:  contract/ addenda, purchaser’s financial documentation, and status of subordinate liens and or negotiations with subordinate lien holders.

5.  The loan servicer must indicate approval or disapproval of Short Sale within 10 business days.

6.  The loan servicer can not require closing earlier than 45 days from date of sales contract without borrower consent.

If the Short Sale is successful the following financial incentives are granted:

• Borrower – $1500 relocation incentive
• Loan Servicer – $1000 short sale incentive
• Subordinate Lien Holder – up to $1000 for approving to take up to $3000 as payment in full and satisfaction of debt

In Part 3 of this series, I will point out the flaws of this document and it’s implementation, as I see it. 

The Treasury Department released a 43-page document in November 2009 that outlines a proposal for streamlining Short Sales across the banking industry and is supposed to take effect April 5, 2010.  This document is being touted as the next best thing since sliced bread and the answer to all of America’s Short Sale problems.  Not only has the National Association of REALTORS(R) been blowing the horn of victory, REALTORS(R) all over are being trained that this document will be the savior of the real estate market and that the banks are going to start playing nice, and rainbows and kittens will fall from the sky, and we will all reap riches from the bounty of this document.  I hate to be a Debbie-Downer, but when’s the last time our government proposed guidelines that were actually effective when it came to the banking industry.  Ahhhh, that’s right, after the S&L scandals.  Didn’t that take years to recover from?  Well, it will take years to recover from predatory lending and a pretty little 43-page document can not fix 7 years of bad lending decisions. 

So, let’s disect the document so that a layman can understand what it says.  This will be a 3 part blog post.  I’ll be sure to link back to each section at the bottom of each post.  This post will concentrate on which properties qualify for the proposed program and how the bank handling the short sale will determine if the borrower (seller) is eligible for the program.  Part 2 will focus on the process of approving the short sale once a contract is received.  Part 3 will address the problems in implementing this document across the lending and real estate industries.  (Yes, Part 3 is when I deflate all the balloons and tell you that you do in fact look awful in those jeans.  In other words, I will be realistic about the effectiveness of this document and the changes it can create). 

Qualifying Properties

1.  The property requesting the short sale must be a principle residence.

2.  The first lien must have originated on or before January 1, 2009.

3.  The borrower must be delinquent or default is reasonably foreseeable. 

4.  The unpaid balance on the first lien is less than or equal to $729,750. 

5.  The total monthly mortgage payment must be more than 31% of the borrower’s gross monthly income. 

Process of Approving the Borrower (Seller) for a Short Sale

1.  Bank will notify borrower in writing of the HomeAffordable Foreclosure Alternatives (HAFA) option and allow the borrower 14 days to contact the loan servicer to request consideration for the program. 

2.  The loan servicer should perform a financial analysis to determine if a Short Sale is in the best interest of the investor. 

3.  The loan servicer may request updated borrower financial information.  The loan servicer must also obtain a signed Hardship Affidavit and verify the borrower’s financial information prior to approving the borrower for the program.

4.  The loan servicer must assess the current value of the property in accordance with investor guidelines that are applied to all of the investor’s assets.  The borrower can be charged for this assessment if the Short Sale is not completed. 

5.  The property’s title is reviewed to verify all liens on the property and the ability to transfer clear title to a purchaser.  The borrower can be charged for this if the Short Sale is not completed. 

6.  The borrower is served notice of approval or disapproval.  The servicer must communicate in writing to the borrower why the Short Sale can not be offered and provide a toll free phone number to call and discuss the decision. 

If you’ve been reading any of my posts on Short Sales, you should be able to pinpoint some problems with the document already.  Again, I’ll address my issues with the document in Part 3.  Want to read the entire document?  Home Affordable Foreclosure Alternative

Ahhhh… the million dollar question.  It will cost us a million dollars to come close to a precise answer and I could make a million dollars by selling the secret to forcing banks to approve short sales in a timely manner.   But let’s see if I can give you a bit of an answer for this question that is burning in everyone’s mind.  (And causing heart burn, I might add).

So, how long does it take for a bank to approve a short sale?  The first key to answering this question is to find out how many liens are on the property and what type of liens they are.  If there is one mortgage lien on the property, the timeline will be shorter.  If there are 2 mortgage liens on the property, add an additional 1-2 months for the banks to squabble over the money.  If there are 2 mortgage liens and a home equity line, this spells trouble and time.  I’m not saying that short sales that have more than 2 liens on them are impossible.  I’m just saying that they are more complicated and take more time.  I know several REALTORS(R) who have successfully negotiated short sales with 3-5 liens.  It will all depend on the type of lien and who holds the liens.

Which brings us to the next piece of solving this mystery.  The bank that holds the liens on the short sale property will be setting the timeline for approval.  Some banks take longer than others.  Some banks need an act of Congress to make a decision.  No seriously, an act of Congress.  Some are so easy to work with and are so fast you feel like you may be missing something.  The banks that are notorious for taking the longest are:  Wells Fargo, any lien formerly held by Wachovia (now Wells Fargo), Bank of America, and any lien formerly held by Countrywide (now Bank of America).  Banks that take a pretty long time, but eventually get you an answer once you get through the initial short sale approval period are Chase, Aurora, BB&T (BB&T is getting worse at approving short sales), GMAC, and SunTrust.  The quickest short sale approvals come from the small local banks and VHDA.  If Fannie Mae is involved in the short sale approval process then you can tack on a few more weeks to the timeline.  Here’s a key to the timeline, the bigger the bank – the longer it takes. 

So, we’re back to  the original question.  How long does it take to get short sale approval?  The easy answer is – prepare for 3-8 months of waiting for approval followed by 1 month of scrambling to get everything done to get to the closing table.  I know!  That’s a crazy amount of time to wait to close on a house!  If you like the house enough, it’s worth the wait.  Patience is a virtue… not one of my virtues, but a virtue, none the less.