House Denied Loan Modification Not even a good reason - But Family member can afford house

If a house is approaching a foreclosure Auction Sale Date, and the house is upside down from unpaid balance to the value. How can we buy the house back? It will be in another persons name how would this work? I know the house will not get sold at auction, because the house is not in so good shape, and the bank will be asking for too much. 

What are our options? What happens after the auction? We can pay the fees to get the house in current condition, but we want to get it cheaper at auction and we can afford it the house. The bank has denied our modification for some nonsense reasons. 

If we bought it at Auction can we stay in the house while this is happening? 


Would love some help.
  • December 23 2013 - San Diego
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Answers (9)

Ray,

It sounds like you should find an advocate at the bank to work with and present your ideas to.  Next time you call, ask to speak to a Consumer Advocate, and explain your predicament.  While they may not be able to help you at this late stage in your foreclousure, they may give you some new options to consider.

A Short Sale would give you a bit more time in the home, but as stated by others, you would need an offer from a non-relative in order to sell the home.  You also need to get an extension on your foreclosure date in order to avoid the home being sold at auction while you are in the process of figuring out your next move.

Best of luck and Happy New Year,
Emma and Janice
  • December 27 2013
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I am actually pissed off now. The banks are scammers, they make a fee from the HAMP Government Program whenever they originate a loan mod file, and then they deny the mortgage loan modification if they cannot make more money on the loan. I know a few attorneys that have won cases like this.

Do banks approve short sales often? Would that give us 3-6 months time to stay in the home? I am trying to figure out the best scenario, since the house is upside down now and it is not feasible to pay the unpaid mortgage payments to make the house current. But it's been our family home since 95, and i wanted to keep it for a long time.
  • December 27 2013
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This is my concern, since the bank wants to be uptight and not give a modification. The house is not even worth $220,000, and the value is at $285,000 and unpaid balance is at $330,000 The house has a lot of inside damage, needs new bathrooms, tile, kitchen, termite damage, etc. So the bank won't even sell it, that is why i was saying what is the best thing to do in our scenario.
  • December 25 2013
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If you want to buy at auction in San Diego you will need to pay cash or cashiers check the day of the auction. You could also look into proposing a short sale contract to the sellers lender but if you go this route you must disclose the buyer seller relationship or risk serious consequences for all parties.
  • December 24 2013
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I know a lady who bid to buy her own house at the auction. Won the bid. Was given 30 days to come up with the funds. Put the house in her son-in-laws' name. He got a loan and paid off the original bank.

So, anything can happen.
  • December 23 2013
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Let me explain it in better detail.

The house is under my Dad's name. Me, my sister, and my mom reside in the house. Me and my sister have different last names. The bank denied the modification because me and my sister were not living in the residence when they defaulted on paying the payments, and we moved in the property to help them out. The bank made the decision that if we decide to move out again, how would they sustain the payments. So they denied it because they looked at the future, and i told them we would be staying there and not moving out. They said they were unable to reduce our principal and interest payment by 10% or more. We should them more than enough income, but i know it is from what i said above about us not living there and they are afraid.


The unpaid balance is $330,000, and the fair market value is $285,000 My sister would be putting the house in her name, so that is why i wanted to know if it would be best to let it go to the auction, and buy it back at a cheaper price.

What would be the best thing to do in this scenario? Would appreciate some help.
  • December 23 2013
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a consumer perspective...

I'm not understanding the logic behind this.

If your relative can afford to buy your $200K house for $250K (and they're willing to do this), why wouldn't they just buy a $250K for $250K.

There are a whole lot of other considerations in this, but it seems ludicrous to ask your relative to start out in a negative equity position.

On another level, it almost sounds like the "can afford" assessment is being made on the basis of being able to bring the house current - not necessarily on having the cash/credit to effect an actual purchase.
  • December 23 2013
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hi what you are talking about is a NON Arms Length transaction which is not a problem if the bank was not involved.  if your family is buying the house in cash and they don't share  a common address or name with you it might be possible however it is unlikely.

you should google this term "NON Arms Length transaction" as it will give you much more detail into your situation. 

Good Luck!
  • December 23 2013
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Hi, Feel free to contact me directly so we can go over your specific situation. Typically, you or any associate/family member/ friend cannot purchase the home. The bank prohibits this. I would be happy to discuss your options with you.
  • December 23 2013
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