Home Buying in Los Angeles>Question Details

ccheng168, Home Buyer in Los Angeles, CA

If I filed formal extension request but the bank failed to respond within the time frame, am I entitled to automatic extension?

Asked by ccheng168, Los Angeles, CA Wed Jan 23, 2013

In a short sale purchase, the bank gave us a "projected settlement" date on 12/29/12 which falls on weekend between two major holidays. In anticipation for holiday delays, we filed a formal extension 10 days before the deadline. They never responded, but ordered another appraisal. They came back after the deadline and wanted much more. Had the bank denied us timely, we could have pushed harder to close in time (in fact, we signed the loan doc and was ready to fund and close just few days after the deadline). I felt the bank deliberately delayed its response, misled us by not saying “no” to our request thus give us a false safety. The bank is now remarketing the property for a higher price, but our escrow has not been cancelled. I am seeking your expert advice. Do I have a legal ground to fight for the validity of our contract? Thanks!

Dave

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Douglas Perez (213) 200-7114’s answer
In a short sale, the Seller still is the legal owner, not the lender.
If you are the Buyer, you can enforce your contract to the Seller, or vise-versa. You don't have any contract with the lender. You cannot enforce anything to the lender. The seller is the one who can enforce legality to the lender.

Ask a lawyer for advise and to revise your contract. Check this site for free legal advise: http://www.avvo.com
0 votes Thank Flag Link Wed Jan 23, 2013
BEST ANSWER
Dear Dave!!!

It is alway best to listen to you realtor if you have one.

Short-sales are complex and there are in a way two sellers. One is an actual person/seller and then there is bank/who approves terms.

Basically heres what i understand from
Your description: you and sellers agree on the terms and bank approved terms of the sale - to close on set day. Then you asked for extencion- which was never granted/executed by the seller - there for you have no extencion at thIs time.
When you presented request for extencion bank probably had to order another appraisal for investor approval. Most likely appraisal came in higher than the contract price - there for bank told seller to increase asking price in order to receive an approval. Hence you see higher price for the property marketed.


As far as legal grounds - I think it's best to talk to your realtor and see what he/she has to say. Check with attorney as needed.




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0 votes Thank Flag Link Wed Jan 23, 2013
With short sales it is difficult to get extensions from the bank and they do not have to respond. As the short sale addendum says the sale is "subject to lender approval". Meaning you don't have a deal until the lender approves everything in writing. You failed to close by the projected settlement date of 12/29/12. The appraisals do expire and after a certain amount of time the lender will order a new one. I am not an attorney but I don't think you have too much to fight for as short sales are "subject to lender approval". You can pay the new price or cancel.
0 votes Thank Flag Link Sat Jan 26, 2013
Thanks for so many expert opinions. Our lender's appraised value was ~10 % higher than my offer price (reflects an improving market), but the bank's appraisal was more than 20% higher, which is not supported by CMA, the CMA points to 5-10% increase. The extension request was submitted through the listing agent, but no one seems to expect the bank will do another appraisal and get investor's approval. Our deal is a "sure thing" as the bank has our HUD-1, they know our loan has approved and ready to be funded. I sense the bank can do whatever they want, eventhough they could have responded to us sooner so that we have a chance to close it on time. We trusted the listing agent as they promised us they will get the extension, to some extent the listing agent unintentionally led us to the failure.

Dave
0 votes Thank Flag Link Wed Jan 23, 2013
You must advice with a Real Estate Lawyer ASAP; it is the best advice for you.

Good luck,
MARY SULIMAN
Broker Associate, Realtor
DRE License # 00800144
Coldwell Banker
450 Washington Blvd
Marina del Rey, CA 90292
Office # 310- 754-8108
Cell # 310- 699-3990
0 votes Thank Flag Link Wed Jan 23, 2013
Hi Dave,

As you may have noticed from the other replies, the bank can do almost anything it wishes to do, until they agree to the HUD-1; which is not signed until 1-2 days before closing.

In non Fannie or Freddie loan short sales, banks are not required to work with the homeowner and/or buyer. It is a voluntary program. On the other hand, Fannie and Freddie loan banks need to work with the homeowner if they qualify for the program. Of course, banks are required to sell the homes for as much as the local market will bear, thus the possible increase in price.

Talk to your current agent, they should be able to provide the exact explanation for your particular case.

Douglas Lagos
Realtor, Certified HAFA Specialist
Coldwell Banker
0 votes Thank Flag Link Wed Jan 23, 2013
Are there realtors involved? Generally they would have checked on the extension request and would know if an extension would be granted. Generally the Lender will proceed with a contract on an approval as a "sure thing" if in fact it looks like a "sure thing" so this is fairly unusual. Were your price and terms in the range of aggressive but reasonable?
0 votes Thank Flag Link Wed Jan 23, 2013
That is a tough situation. But "the bank" is not "remarketing the property". The listing agent is.

I would be curious to know what your contract price was & what the new value is that the bank is wanting the property to be 'remarketed' at or what amount they want you to now pay?
What's the percentage difference between these 2 figures.

If I were the listing agent, before hanging you out to dry, I would have resubmitted your contract to the bank at the price you had offered previously. And try to fight it a bit more, on top of that I would suggest to order a formal appraisal & submit that so they're seeing that + their own appraisal report.

I would also be curious to know if the listing agent was present when the bank sent out a new appraiser & did he or she have a comps report in hand supporting the amount you offered?

All short sales are subject to approval & beyond that are subject to the lien holder receiving & accepting the Final HUD-1 Settlement statement which they won't get until 1-2 days before closing so they can give the final green light to close. So, I suppose they can do anything they want in the meantime. Trust me, I know that's a horrible answer, but this is how the banks are acting sometimes.

Shoot me an email directly if you'd like to talk about this further, I don't look back on this same Trulia thread for answers posted after mine.

Emily S. Knell
EmilyKnell1@yahoo.com
562-430-3053 c
Realtor Since 1996
Realty ONE Group
Short Sale Specialist - 99.8% closing success rate!
0 votes Thank Flag Link Wed Jan 23, 2013
Do you have a Realtor? These are incredibly hard deals to do without one. Since you are asking legal advice, I really encourage you to consult with an attorney. Without seeing all the contracts, there's not a lot more that I can offer.

But please, do yourselves a favor, and work with a Realtor next time :)

Good luck.
0 votes Thank Flag Link Wed Jan 23, 2013
Hi Dave,
I am sorry you are going through this. I just want to point out that in a short sale, the bank is not a party to the contract. The bank just needs to agree to accept less than they are owed and release the lien on the property. All the bank did was say we will accept the current amount if you close by 12/29. Also, it is not the bank that is remarketing the property it is the current owner.
Good luck,
0 votes Thank Flag Link Wed Jan 23, 2013
Hi Dave,

If all parties did not sign the extension and the closing date has passed, there is no longer a contract. Your Realtor should have made sure the extension was signed prior to the scheduled close of escrow. I would have your Realtor contact the listing agent or escrow company to get the cancellation of escrow paperwork so you can get your earnest money deposit back - if the bank is not going to extend your close of escrow. Since you do not have a contract any longer, if you still want the house, you can submit a new offer.

Good luck.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Wed Jan 23, 2013
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