Home Buying in Palmetto>Question Details

Worthy Buyer, Home Buyer in Palmetto, FL

Can a bank cancel your contract on an REO home claiming previous owner has requested loan modification? This is not a short sale.

Asked by Worthy Buyer, Palmetto, FL Tue Nov 2, 2010

I am relocating to another city. I've been in contract since mid Sept on a BOA home and last week the bank said the previous owner filed to put the sale aside and they want to cancel escrow. Court records show judgement for foreclosure and that online auction occurred. #1 Bank will not disclose any information to me and only say that if I want to wait it out I can. #2 Contract states we close by Dec 2nd. #3 I have a tenant ready to sign a 2 yr lease on my current home, but they have to move in by Jan 1st. #3 Listing agent is the head of her brokerage and claims no responsibility or willingness to help. #4 I have contacted an attorney,but since she doesnt seem eager to answer my questions, I am assuming I have no case. #5 I have EM in escrow and another $1395 in inspections and appraisal. #6 previous owner has already purchased another home and advised the courts two yrs ago that they could not make the payments. Shouldnt someone be accountable to give me some answers?

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Bank of America, the "servicer" for the actual lender isof the well known offenders who filed fraudulent foreclosure paperwork. They may not be able to locate the mortgage documents that they "attested" to having possession of so it may be easier for them to grant a modification to the previous owner. It really doesn't matter if the previous owner bought another house or not. Also your personal financial situation with a tenant is also not relevant to your REO contract. If the previous owner filed the correct legal objection then you are very likely out of luck, sorry.

Read your REO contract, it normally allows the lender to escape without any costs to them and also doesn't allow you to be reimbursed for your costs.

Of course you can pay the cost to hire an attorney to try to collect your $1,400 loss but it may cost you the same or more to get the $1,400 back and you may not have a legal chance of getting that money if your contract clearly spells out the lender's ability to cancel your contract at their whim.

Hope this helps and by the way, your agent couldn't have done anything to prevent this from happening so I wouldn't even think about assigning fault to her.
2 votes Thank Flag Link Tue Nov 2, 2010
It appears as though you could be one of the first to end up in this delicate situation. Was the attorney you contacted a Real Estate Attorney? It's hard to say what could happen with this, or to advise which way to go. Technically once a home is an REO listed by the bank there is no chance for a loan modification, so this does sound very strange.

Contact a Real Estate attorney, but they may be weary also because this situation is one of the very "gray" ones we knew were coming.
2 votes Thank Flag Link Tue Nov 2, 2010
Worthy buyer, if the home is being returned to the previous owners because of a botched foreclosure, then maybe you can contact them through your agent and they will be willing to short sell it to you. You already know a price that the bank will accept I don't know the foreclosure laws in your state but here if the bank needs to start all over again with the foreclosure filings it will be more than six months. B of A stopped all foreclosures to investigate if they were doing the procedure correctly so I am sure we will be hearing this over and over again. Your EM shall be returned to you.
0 votes Thank Flag Link Wed Nov 3, 2010
Worthy, I feel for you. You are one of the many victims in the foreclosure fallout. Unfortunately, I'm sure there will be many more stories like yours. Good luck.
0 votes Thank Flag Link Wed Nov 3, 2010
Worthy, All good answers here. Read your REO contract carefully. With all the problems with BOA foreclosures, this may be one of them. You may be out of luck!
Hope you find an acceptable solution.
0 votes Thank Flag Link Wed Nov 3, 2010
Worthy Buyer here. Yes, I was very aware of the foreclosure Freeze and bugged the realtor to find out how we could check on this. I was told it would come up with the title company. The sellers agent's response to me was that they were ready to close on their side, just waiting on my mortgagebroker. Then 3 business days later, I got the bad news. I tried contacting the title company for an explanation. She said the previous owner had filed suit and they were cancelling my escrow. Her memo said the previous owner filed suit prior to the online auction(Aug 3) of the house to set the sale aside, but the bank did the auction anyway but they were not aware of it until last week.

And yes, this property is one of a kind. I work with dog rescue and need land away from other homes. They are few and far between in my price range.
0 votes Thank Flag Link Tue Nov 2, 2010
Worthy, it's possible that the owner is trying to buy the home back. Don't know about Florida but in Ohio if a house goes to sheriff sale and sells the owner has xxxx days to try and buy the home back. That's obviously different that a foreclosure but you don't say what kind of auction. My guess is that the bank had a clause that said they could sell it at auction first or the bank had some type of "first right of refusal" clause in the contract. If it hasn't actually been foreclosed upon and the seller is trying to modify their loan welcome to America. BOA put a halt to their foreclosures two weeks ago, maybe you didn't hear. This house could be tied of for many more months. You are the victim of this new legislation designed to help those who may have been unfairly foreclosed on.....

Good luck.
0 votes Thank Flag Link Tue Nov 2, 2010
This one screams real estate lawyer- real estate lawyer!! You have some money invested in this transaction and this situation sound fishy to me! Is this property worthy of all of the goings on?
0 votes Thank Flag Link Tue Nov 2, 2010
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