Home Buying in 60523>Question Details

Amydonohue, Home Buyer in 60523

i put an offer on a short sale and now it was sold at the foreclosure auction. The listing agent said they still have time.

Asked by Amydonohue, 60523 Sat Mar 10, 2012

Is this possible once it was sold back to the bank is it now a foreclosure or does the homeowner still have time to sell the home.

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James Gordon ABR PBD SFR SRS’s answer
Amy is the deed recorded yet? The sale is not complete and the forclosure action is not over until the deed is recorded. There very well may be time if the lender asks for a delay in the execution of judgement.

I have a property in the prelist stage where it is being taken care of by the lenders property preservation department. We are waiting for about a month for the lender ordered appraiser to be able to get inside as the lenders property preservation department has not given up the lockbox code even though the lenders legal department pulled the property from forclosure auction and the lenders short sale department granted a cooperative short sale agreement.

The lender would rather see the property go as a short sale than take ownership so depending on the stage of the forclosure action and the redemtion period in your state the may very well be time.
1 vote Thank Flag Link Mon Mar 12, 2012
BEST ANSWER
Amy - The answer is sometimes. If NO one purchased the house at the Sheriff's sale, then either the bank, Freddie Mac or Fannie Mae gets it back.

There is a 30 Day Redemption period which you can still get the house. I processed a short that we could not stop the sheriff sale because Freddie Mac only allowed 1 extension. No one purchased at the sale so Freddie got it back. Freddie Mac still allowed the short sale within that redemption period. The deed still had to be signed by the owners etc. so YES it can happen. The Sheriff Deed did not get recorded and YES, the foreclosure was reversed on the sellers credit report and it was officially still a short sale.
0 votes Thank Flag Link Sat Mar 10, 2012
Since it is no longer a short sale, the owner has no control. It is now "bank owned".
Although short sales and foreclosures are tempting, they can be frustrating. The process is never quick and clear cut and you are one of many fish in the bowl
There are many great deals out there that are straight seller to buyer deals that are clear and expeditious
I believe that sellers are now "getting" the current pricing and we will see sales pick up
Sharon McCauley
ERA Team Feinstein
(630)660-6819
1 vote Thank Flag Link Mon Mar 12, 2012
Hi Amy,
Seems as if the listing agent lost track if the process. The Attorney or listing agent would have been negotiating the short sale for the seller. Seems strange that it still went to Sheriffs sale because the attorney should have delayed that from happening with your offer. My partner and I closed 40 short sales in 2011 and I know this is how it happens.
The bank will not realist for 3 to 5 months depending on the bank. We're there 1 loan or 2 Loans? That sometimes can add problems. Get your earnest money back!
1 vote Thank Flag Link Sat Mar 10, 2012
Thanks everyone I would like to add that we did offer a little more then the owner of the home owed to the bank but we are thinking they probably ran out of extensions with the bank since it has been on the market for 2 years since Feb. 2010. Well hopefully the bank re-list soon.
0 votes Thank Flag Link Sun Mar 11, 2012
Once the bank takes back the home at foreclosure auction, the owner is now the bank. It is very rare after a foreclosure auction that they approve a short sale. It should have been done before the auction. Banks will postpone foreclosure auctions if the short sale is close.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sat Mar 10, 2012
Short sales are great opportunities for buyers. But if the bank does not agree with the offer, you have no contract unless the owner agrees to pay the bank all that is owed, at closing.

I am not sure I clearly saw the question in your comment. I'll assume that your listing agent was referring to the bank's time when the agent said, "They still have time."

Here is what appears to have happened.

The home owner missed mortgage payments and the mortgage servicer took action to initiate foreclose. This can take 200 to 300 days so the owner had time to scramble. The owner, facing foreclosure and possible bankrupt tried to sell the property (for less than the mortgage debt - thus short sale). The bank should prefer any offer that is greater than the bank's loss in a foreclosure.

So then, you made an offer that the owner (not the bank) accepted. The bank must have decided that the offer was less money than they would recover by going ahead with a full blown foreclosure - which forces the sale of the property at auction.

I don't think the bank accepted the price and terms because you only said that you "put an offer on a short sale". You had no contract. The bank owes nothing to you.

The bank had time because they were the ones who decided when to quit waiting for an acceptable purchase price (to cover the mortgage debt).

There could be other factors. Such as, if the bank lost your offer in a pile of paper, they may have overlooked your offer and decided to foreclose. Or, there may be a problem with the mortgage and loan note paperwork so the bank would not have been confortable allowing a sale to continue. This gets a little complex.

Your real estate agent can answer your question in more detail. But understand, the bank doesn't have to tell everything to your agent.

Jim Broline, Broker
RE/Max Elite - Hinsdale
Web Reference: http://www.jimbroline.com
0 votes Thank Flag Link Sat Mar 10, 2012
Once the Trustee's Sale has taken place; the house is FORECLOSED. It belongs to the bank. The Homeowner is done, finished!

Now, in about 4 to 6 weeks, the house should be listed by a Realtor who will sell it for the Bank.

The only exception is that some States have laws for REDEMPTION and if the homeowner can come up with the money, they can redeem the mortgage. It doesn't happen too often.
0 votes Thank Flag Link Sat Mar 10, 2012
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