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Short Sale loan problem

Hi here is my situation and I want to know who is right and who is wrong.

I am buying a property in a short sale with BofA as a primary lean holder. I have an approval letter from BofA. There is another lean holder who we are settling with for $50k. Then there is HOA. HOA is owed about $20k. The HOA is also on the title of the property as oppose to the seller of a short sale. Looks like HOA foreclosed on the property and that's why HOA is on the title. We also agreed to settle with HOA for $17k.

 

The lender just declined my loan after a long process that was going well. The reason they declined is because the seller is not on the title of the property and that he cannot legally be selling a place that he no longer owns. The contract with his signatures is not legal. Is the correct?

 

My agent and the seller's agent are both telling me that this lender is unprofessional and they do not know what they are doing. They are telling me that this is very common in a short sale process where a seller is no longer on the title. They are saying that HOA will put the owners name back on the title at the last moment as soon as the loan is funded. Is this normal?

  • June 15 2012 - Los Angeles
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Answers (3)

Lenders are becoming much stricter with showing the chain onTitle. If the HOA has taken Title then the lender might have an issue with the fact the sellers are not onTitle. Technically they cannot sell the home if they are not on Title. Personally I have yet to have an HOA actually take over the home. Did they actually foreclose in the home? If the lender wants a clear chain of Title it will not show up prior to them clearing it to close if the HOA is waiting for them to fund first. In my experience it has not been normal. Maybe you can check with another lender and their underwriting and approval guidelines. I would not say the lender is wrong. I think they seem cautious, I have and that. Where the banks foreclose and there is missing information and steps on the chain on title. I would have your lender explain what can be provided to cure the issue? Or interview other lenders and their experience with this. Maybe some overlook it..only I have no idea IF that impacts you .so in conclusion,,ai think you need to discuss this particular home with a lawyer and this situation, There might be short cuts that can be done,..just not sure they are supposed to be done, With all the crazy changes in laws and all these foreclosure issues..HOA issues...it seems the line btwn what is legal and customary have been blurred. Discuss this in depth with your agent and a Lawyer and another lender, I am sure you can work it out, best wishes Suzie
  • June 15 2012
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Profile picture for Ofe Polack
It seems to me that this is rather a legal issue, have you discussed it with a real estate attorney?
  • June 15 2012
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Profile picture for Cindy Quinton
You might bump this first thing in the morning to get some lender perspective.
  • June 15 2012
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