Short sale approved by first lender Chase but...

Experts,
I had written an offer on a short sale which has been approved by first lender Chase Seller is covered under HAFA. Chase gave us 30 days to close. Just today after this approval case the sellers agent found that the second lender Bank of America which held the second loan has sold the loan to a collection agency by mistake and now the sellers agent has to submit documents to the collection agency so that they return the loan documents to BofA and short sale goes through..
Questions are:
1. Is it normal to have these kind of instances?
2. What the worst case scenario in this case. Is it possible I may not get this house? what is that scenario?
3. How long can this clarification to the second loan holder, BofA take and shall we be able to close within the time given by chase?
  • September 15 2011 - Fremont
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Answers (2)

This is where experience prevails.

In order to close under a HAFA deal, the second lienholder must choose to release the lien, not seek a cash contribution AND must not pursue a deficiency judgement.  Deficiencies vary state by state.  I do not know the laws of your state.

If your state allows lenders to pursue a deficiency, then your agent and/or the listing agent should have known not to go through with a HAFA short sale when a second is involved.

It will take BoA probably at least another 60 days to get this back and process it.  I'd say, start looking for another home.
  • September 16 2011
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Sounds like a very frustrating situation, one that many people dealing with short sale offers. Because there are 2 outstanding loans, technically 2 banks own the house, therefore each bank has a say as to if they will accept your offer, regardless of what the other decides. 

1. This is normal and happens regularly with foreclosure and short sale properties that have 2 loans (1st and 2nd), and thus deters many people from pursuing them in the first place despite their potential for being good deals. 

2. It is indeed possible that the bank will not be able to respond to your offer in the time you allow them to accept or reject as they have sold the note - I strongly suggest continue to look for other properties as it is likely the bank is going to put this home on the back burner.

3. Banks are notorious for communicating poorly with their customers, therefore I suggest not holding your breath and continue to look for other properties you qualify for.

Good luck!











  • September 16 2011
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