Profile picture for losthomebuyer

Short sale home goes into forclosure 3 days before closing, how can I still close?

we were 6 months into trying to purchase a short sale home. We did everything we needed to do to close. we had the inspection appraisal and plat of survey done. We were set to close on Monday everything looked like it was going as planned, the Friday before we are told the home went into forclosure and we cannot purchase the home anymore? We really want to purchase the home but our lawyer or realtor have no idea what steps we need take ro finalize the deal. they are clueless.
  • November 12 2011 - Batavia
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Answers (12)

@virgindoc

Did you call the agent listed on the BOA site directly?
  • November 16 2011
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Short Sale Protocol (my experience thus far). 1. Note Holder reviews Default Borrower's situation...requests documentation (Hardship Letter, Income VS Expenses, etc)..Tells Note Holder to get property Listed For Sale. 2. All Offers must be accepted/Signed by Owner/Seller and then forwarded to Bank/Lender/Servicing Agent who, in turn, presents Offer to its Investor (who actually holds the Note In Default)... Investor accepts or counters. 3. All and any Offers are considered as a "group"...Investor has no allegiance either Party or the Realtor/Broker... Seller/Borrower wants to be released from the Note and Investor will likely take 60-70-80 cents on the dollar rather than give it to Lawyers acting as Trustees for the D/T.  Investor's servicing agent (the Lender, Bank or other) will not talk to anyone but the Borrower, UNLESS the Borrower gives written authorization (Privacy policy)... At this point, the Lender/Investor/Bank does not "hold" the Property...which is still owned by the Borrower, subject to terms of the D/T. Borrower is best advised to give its written authorization for its Realtor/Listing Agent to fully discuss the deficient/default Note. Even then, it's not as "clean" as it should be -and- the "Rules" are in constant flux (on part of Banks and Servicing companies).  As a rule, if an Offer is presented to the Investor/Bank/Loan Mitigation Specialist/Preservation Dept (a lot of different names can apply), the Foreclosure process "should" be paused to consider and negotiate. Again, the Seller/Owner really shouldn't care as they want to be "off the hook" for the loan... if the Short Sale is successful, the Seller/Owner may end up agreeing to a personal Note for the difference, or more than likely, a 1099-S for the difference. Any "closed" Short Sale is at "arms length" by all Parties and all representative Brokers.  The Bank/Lender/Servicing Agent is likely a department/pool of "specialists" dealing in Loan Modification...  communications can be a bit inconsistent, so don't be surprised by the latter.  I could offer more, but this may give you a bit more incite. Good Luck.
  • November 16 2011
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Profile picture for virgindoc
we are kind of in the same situation...short sale going to foreclosure and no one knows anything...including our agent.  Very frustrating.  We found the house of our dreams, offered full asking price in cash and gave our agent a big check for earnest money. We found the house on Bank of A website, which listed it as foreclosed (bank owned) but our agent said that it has 2 listing agent (still in short sale) and now has a contract on it.  We just want to know what the status is...the listing agents wont return our calls, the bank wont talk to us (not seller) and our agent knows nothing!  You would think someone would want to sell a house.
BTW - we are in the same position with our agent...she is stearing us to bigger, more expensive houses...always saying - oh you dont want that house. We are both doctors and I guess she just sees $$ signs.
  • November 16 2011
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I would cotact the attorney or settlement agent you are working with on the transaction. They deal with these problems on a ongoing basis. I'm sure you are seeing this happen more often lately and I would bet the bank would rather get it off their rolls than to go through a long foreclosure process. Seek legal counsel though.
  • November 15 2011
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Profile picture for losthomebuyer
It depends what state you live in....contact a local attorney. In colorado you could still close upon the sale date. I am not sure what the laws are in your state...what does your real estate agent say? Best of luck....


Ive talk to my realtor and she is so gunho on making money she is stearing us away from the home and showing us other ones. problem is ive invested 6 months and now me and the wife are emotionally attached to the home. My Lawyer has no clue as to what to do at this point and cannot answer any questions reguarding the matter. What i have heard was that we had 30days to go into the courts and asked for an extension from the date the forclosure was filed but that has come and gone. just lost and not sure where to go on from here.
  • November 15 2011
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It depends what state you live in....contact a local attorney. In colorado you could still close upon the sale date. I am not sure what the laws are in your state...what does your real estate agent say? Best of luck....
  • November 14 2011
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Profile picture for lndshk
This is the kind of situation which makes me very leary of trying to buy a short sale.  The news last week, said that recently Arizona Banks are becomimg friendlier to short sales than in the past.
  • November 14 2011
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It isn't as unusual as you might believe, particularly with larger banks. Often the foreclosure is handled by a completely different department than the short sale.

If it's BOA, try going into a branch and seeing if a branch manager or superviser can start making calls on internal numbers. We had some real nonsense when we closed on the property we are currently living in (that was also a short with all sorts of shenanigans). The listing agent was not nearly as helpful as he thought he was being. I ended up having the calls go internally from some connections on my end to get it straightened out. MUCH more effective since some of the short sale process with BOA is outsourced right now.
  • November 12 2011
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Find out which bank and then try to find out who they will assign the bank owned listing to and just watch MLS.  Check the property and with the owner as many times the bank agent is contacting them to pay them to move out and you can find out who to get in contact with to get a jump on buying it as a bank owned property perhaps for less then the short sale.

Short sales if done correctly are easy, so make sure you are working with an agent that is a CDPE and if the listing agent has experience or has a pro handling the short sale for them.

Bottomline the bank will relist and you just need to be ready to jump on it.
  • November 12 2011
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Most states have a redemption period during which an owner can 'redeem' their home after foreclosure for the amount owed.

Of course, you will need to consult with your attorney, but it could be possible, with the payoff/approval letter you have from BoA, that your attorney could help you structure a deal with the seller to 'redeem' the home for the payoff already agreed to by BoA.  Then, transparently, the Seller could sell the home to you.

It will be risky and tough, but it can be done.
  • November 12 2011
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Profile picture for losthomebuyer

you are corrrect we did have a appproval letter from BofA, what the other side is telling us is that the homeowners signed some sort of document agreeing to forclose on the home days before we had a signed contract from the same buyers to purchase the home as a short sale . thats the story that we are getting.

  • November 12 2011
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That is very unusual if you are not leaving something out. In order to do a short sale the lien holder needs to give permission. You should have received a written 'approval' from that lienholder (via the attorney's) BEFORE you ever started to do an inspection and apply for the loan. If you did those things before the written approval you risked that the lienholder might NOT approve the deal and then they might just sell the loan to someone else or allow the property to complete the foreclosure process and take it over.
However it sounds like you received the written approval which is why you did the things you say and which is why you had a closing date and were ready to close. IF this is true then it makes no sense for the lien holder to complete the foreclosure process and take over the house because it costs them much more money and work once they become the owners. The whole point of a short sale is for the lien holder to save money vs taking the property as a foreclosure.
You need to ask the attorney for the seller and the agent for the seller what happened. Something screwed up on the other side.
The only possible good thing about this is that the house will come back on the market as a foreclosure and it should be priced less than you thought you were paying now.
  • November 12 2011
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