Profile picture for Bert Pope

Bank denying short sale offer, then foreclosing, selling property for much less. Banks Liability??

If a bank will not agree to a short sale at 250,000 with multiple offers.(250k being the highest,cash). They would not budge from 255k.But, then they push the foreclosure and sells the property for 10% less than the best offer presented as a short sale, within months. Is there any liability exposure from not allowing the sale to occur as a fair market value short sale.
Now the sellers have a foreclosure instead of a short sale on their credit and they could not have sold it for any more, obviously.
FYI. sellers maintained the property in excellent condition even after moving into retirement home. They even kept paying all association dues till the foreclosure was final.
  • June 23 2012 - Tallahassee
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Answers (4)

Profile picture for Ofe Polack
Your question could best be answered by an attorney.  A lot of these transactions do not make sense whatsoever, but this is life in the 2000s
  • June 23 2012
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If the loan was guaranteed by an outside party, the bank may have no interest in taking a short sale loss if they can be guaranteed to be made whole in a foreclosure.
  • June 23 2012
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Why are you assuming that the bank servicing the transaction was the owner?  There was likely an investor or investors that had to approve the transaction.  Those investors likely gave the bank (servicer) instructions as to what they want as a "net".  There could be all sorts of justification on the investors side including mortgage insurance, when to claim or write off the amount of the loss, how they show it on their books, etc.  Even if they "net" less on the transaction after the foreclosure, they may have other incentives that benefit them.  Or maybe they are just bad businessmen.

The point is Short Sales are complex (as are foreclosures) when debt is forgiven someone, most of the time it is not the bank, has to eat the loss. It could be my 401K or your pension fund or a bank in Greece that is getting a bailout.
  • June 23 2012
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What I cannot understand is why the $250,000 cash offer would not RAISE the price to $255,000 and buy the home?

The banks have other means of being made whole after foreclosure and some even make MORE money.Some banks hold off the sales to keep their earnings looking better to their stock holders.If they can sell at a loss in a different quarter ,that might be better for their overall stock worth.

The $250,000 offer should have raised their price. If  they canceled the contract I would try to relist it with a price approved and see if a new buyer can be found. Nothing makes sense these days.Does it make sense that an owner can stay in their home for up to 3 years,not paying ,just because they are upset the home is not worth what it was a few years ago?
  • June 23 2012
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