What "Lender Consent" Does (and Does Not) Mean

The term Lender Consent is found throughout Form 22SS, the short sale addendum to the purchase & sale agreement. When we're working with a buyer's agent on a short sale, we often find that there is a lot of confusion about what Lender Consent really means. What is does not mean is that the deal is done. Unlike a standard sale, there are two parts to a short sale closing. Here's how the process works:

Once an offer for a short sale purchase is agreed upon by the bank, they send the seller a written approval letter that outlines the terms under which the lender will authorize the sale. The letter includes the price, deadline for closing date and may address how the debt is treated. It may also include a dollar amount the seller must bring to closing or other terms. For the sale to actually proceed, the seller must agree to all the terms in the lender's approval letter. The seller's other option is to terminate the agreement. The sale will not move forward until the seller gives notice to the buyer that they have received the approval letter and have consented to the terms. We have additional FAQs about the short sales process on our website.