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Firsttimebuy…, Home Buyer in Modesto, CA

What are reasons that a lender would foreclose instead of taking a short sale offer? We gave the offer about

Asked by Firsttimebuyer, Modesto, CA Thu Feb 28, 2008

a week before they foreclosed. Does it mean it was already in the process?

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If there are other liens on the property in addition to the mortgage, it requires all parties to agree to the terms of the short sale. A foreclosure can wipe out all the other liens and clear title. This can open the path to buyers at a lower price as an REO than could have ever been achieved in a short sale.
0 votes Thank Flag Link Mon Mar 10, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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Because they would be taking an even larger loss on the home, if they wait until foreclosure they make a little more money....our realtor advised us to stay away from short sale homes, he said it is a waste of time and nine times out of ten the bank will not accept any offers... one of our friends waited over 3 months before the bank declined their offer
0 votes Thank Flag Link Mon Mar 10, 2008
A short sale offer just a week before foreclosure really isn't enough time. I'm sure someone will come forward with a story about how they did a short sale in 5 days, or whatever, but you really have to allow a couple of months. And sometimes that isn't enough.

Having said that--and in the case of making a short sale offer just a week before foreclosure, there wasn't enough time--sometimes lenders still prefer to foreclose. Some may feel that they can get more for the property--or lose less--by selling it themselves than by accepting a short sale offer. Others sometimes feel that property values will rebound strongly, and they'd rather sit on a property for 6-12 months, if they can get, say, $100,000 more for it later. Others sometimes look at the equity in the property and decide to go for that. I spoke to an owner being foreclosed on earlier this week. He'd put $100,000 down on a home a number of years ago...paid down the mortgage some...value of the property had gone up. But, as a small business owner, ran into a cash crunch and missed one or two mortgage payments. He wanted to work it out with the lender, but the lender refused. So he's probably going to lose his home.

Those are just a few reasons why a lender would foreclose.
0 votes Thank Flag Link Thu Feb 28, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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