Home Selling in West Allis>Question Details

Frustrated, Home Seller in West Allis, WI

we sold our home as a short sale in june.. we had an escrow acct for taxes. Does the bank get to keep that money? Or is that money ours?

Asked by Frustrated, West Allis, WI Fri Oct 28, 2011

We missed 2 mortgage payments before the home was sold as a short sale. And they are telling us they keep that money because we missed payments but we were not told that at the end of the short sale. And when we called the bank asking for the money they said it takes 90 days for the escrow acct to close so then we call back and got many different answers and then today they say no we dont get that money back. Is this correct?

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5
Dp2’s answer
I'm actually kind of surprised that you didn't learn about this upfront. Many agents/brokers, attorneys, and/or title company staff disclose this prior to (and sometimes during) the closing.
0 votes Thank Flag Link Sun Oct 30, 2011
The answer to your question may be in the paperwork that you received as part of your short sale. I have documents from short sale lenders that specifically say that any balance in an impound account for taxes or insurance will be paid to the bank.

That makes sense, doesn’t it? The bank has approved your short sale and taken less than you owe on your mortgage to do so. They tend to think that excess funds that are available at close of escrow should come to them to reduce their loss.
0 votes Thank Flag Link Sat Oct 29, 2011
Most lenders are using something close to the HAFA guidelines for short sales laid out in April of 2010 with some adjustment in 2011. It is easy to google and find lots of information. One of the original intents was to have sale price preapproved to make the process simpler. In my opinion this goal is falling far short. There are also provisions to incentify lenders who have 2nd mortgages to release their lein by giving them some money in cases that they would likely get nothing in a foreclosure. In the past, if the short sale did not get them some money, they would not release the lein and any attempt to sell the property would be futile. There is also a provision to give owners $3,000 towards moving expenses as an incentive to cooperate and avoid foreclosure. Keep in mind this is only an guideline. I have seen both higher and lower amounts. In one of the short sales I did, the lender's short sale offered a $1,000 incentive but only if the owner was current. It is rare in a short sale this is the case. I had another were the owner did not make a payment for months but was still offered an incentive. If your lender offered to return the escrow to you, this could be considered an incentive. If you never got it in writing, you are likely out of luck, especially if you signed anything saying you had to be current.
0 votes Thank Flag Link Fri Oct 28, 2011
Frustrated,
You sold your home at a loss to the lender. Chances are that any funds they had would have been applied to minimize their loss and close the file. While I do not know this as I haven't seen your file, I wouldn't plan on getting anything back from the lender. If by chance you do, count it as found money.
0 votes Thank Flag Link Fri Oct 28, 2011
You owed to the buyer from 1/1/ of the year you sold to the day you sold it to them. So if you had a escrow account and missed 2 payments you may not have had enough to cover this amount. Look at you closing statement and it will explain where your tax money went. You may still have money coming from your home insurance because that is paid up front for the next year. Taxes are paid monthly with sometimes only 2 months extra in the account.

Debby
Homestead Realty Inc
0 votes Thank Flag Link Fri Oct 28, 2011
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