It is possible,...
It sounds to me as though your agent / broker started to work on your short sale and communicated with your lender, and the lender conveyed that they are foreclosing as the investor may not allow short sales.
This has happened to me before. Some lenders do not do Short sales at all.
Please understand, there is a servicer for your loan ( the company you pay your mortgage to ) and they in turn pay the actual lender or investor.
The Lender is the investor on the loan and makes that decision. The actual lender is rarely the bank you deal with.
Some investors do not allow short sales at all.
Harold Sharpe - Broker
So Cal Homes Realty
California Department of Real Estate License # 01312992
Please call me at (661) 255-3335 if I can be of assistance.
Cheryl Garner, Mortgage Expert
Recently, I conducted a Cash For Keys for renters of a newly foreclosed home. The listing was taken back when we found out that there was already an approved short sale on the same home with the owners. The right hand of Freddie Mac foreclosed on the home, assigned the listing to us and followed thru with a Cash-For-Keys with the occupants. The left hand of Freddie approved a short sale. The foreclosure listing was un-assigned and the short sale was completed.
Have your agent jump on the bank and try to get an extension on the sale date. He/she may be able to stall that in order for you to get the home sold. Good luck!
Talk to your current agent to contact the foreclosure department and discuss settlement options before sale.
Jason D. Coriano
Unfortunately the bank can continue their foreclosure even with your home listed until you have a valid offer submitted and accepted by the banks asset department, and even then that may not stop foreclosure proceedings. The Bank sees it as you have defaulted and they do have the right to pursue their legal remedy which is foreclosure. If they have notified your broker that they are proceeding you should consult with him as to your next step. The banks are proceeding far quicker than they used to on foreclosure proceedings, and I have seen people with their homes listed as a short sale still being foreclosed on. Please consult with your Broker and an attorney along with a tax advisor and mortgage lender. I know it seems like a lot of steps to take but anything you can do such as a deed in lieu of foreclosure to the bank would be far better for your credit rating if you want to purchase another home in the future. Good Luck and I wish you well!
A lender can accept a short sale agreement as an option to foreclosure; however, the lender always has the option of foreclosure as long as they have properly executed the foreclosure process. Your "approval" to foreclose is not a lender requirement as the loan docs that you previously signed authorizes the lender to foreclose should you cease paying the mortgage.
If you do not have a binding contract to sell your property, then the bank will typically continue their normal course of action, assuming you are behind on payments.
I'm not sure what forms you signed, but my guess is they contain some type of disclosure stating that a short sale is not guaranteed.
You might ask for a loan modification, but keep in mind, not everyone qualifies for this program.
Better Homes & Gardens Real Estate Metro Brokers