Foreclosure in 95219>Question Details

Stacey4foley, Home Buyer in Frisco, TX

How does a home that was on the auction block 3 weeks ago become a short sale? When the owner hasn't made a payment in over a year?

Asked by Stacey4foley, Frisco, TX Wed Jan 9, 2013

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4
Short answer is that it was listed for sale prior to the actual trustee's sale/judicial sale. Just because an auction or trustees sale has been scheduled, does not mean that it will actually take place. They are only initiating the process. To successfully foreclose on a property it takes follow through.

There are many reasons why and how this can happen. In the meantime, remember that the home is owned by the person listed on the DEED. For the most part a deed holder can start a sale of the home/property at anytime they are the property deed owner.

But here are a few reasons it may be a short sale even though it is/was on the auction block:

1. The lien holder (Typically Lender) has decided to postpone auction.
2. Bankruptcy has been filed, foreclosure halts, owner can still list the home for sale.
3. Owner/Borrower has negotiated to have foreclosure postponed by attempting to do a short sale.
2 votes Thank Flag Link Wed Jan 9, 2013
Hi Stacey4foley,

The California Homeowner Bill of Rights became law on January 1, 2013. It contains a restriction on dual track foreclosure: Mortgage servicers are restricted from advancing the foreclosure process if the homeowner is working on securing a loan modification. When a homeowner completes an application for a loan modification, the foreclosure process is essentially paused until the complete application has been fully reviewed.

This could be one reason.

http://oag.ca.gov/news/press-releases/california-homeowner-b…
0 votes Thank Flag Link Thu Jan 10, 2013
Most banks will delay a foreclosure auction if the house is listed with a Real Estate Broker as a short sale. The reason is very simple, they stand to get more of their money back through a short sale than they will after the home has been foreclosed on. The government's HAFA program even offers homeowners financial incentives to do a short sale and stay in the home until the closing. It really is a win/win situation. The bank is assured the home is at least somewhat maintained, pipes are not freezing and so on, as long as it is occupied and the homeowner receives a stipend as relocation money. Happens all the time, not at all unusual.
0 votes Thank Flag Link Thu Jan 10, 2013
My confusion is that the home has been listed as a foreclosed home on all the websites for 3 months and then went to short sale 2 weeks after the auction date.
Flag Thu Jan 10, 2013
When an offer is received for a short sale it is standard to request a foreclosure postponement .
0 votes Thank Flag Link Wed Jan 9, 2013
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