Bank had a short sale of our rental property , did not contact us before and even after or letting us know we owe them money after the short sale.

Asked by scon.sai, West Palm Beach, FL Sat Apr 6, 2013

We contacted Banknumerous times for help because our rental property in CA worth $700,000 dropped to $3000,000 and we had trouble paying the rent. Well, bank went ahead after over a year and foreclosed the property without even 84cf66439dcontacting us , they reported to credit bureau that we own them over them money. Several attempts to contacts BAnk has proven unsuccessful as no one answers the phone.what do we do. The bank never informed us that we owe them money or made any attempt to talk to us before and after.

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Grace Hanamoto’s answer
Grace Hanamo…, Agent, Cupertino, CA
Sat Apr 6, 2013
Hi Scon and thanks for your post.

First, before we start, a bank cannot, by itself, force a short sale. The bank can foreclose on a property, but a short sale is something that the seller initiates and the bank approves.

Second, a few things don't make sense to me regarding your situation, and hopefully, you can answer back with some pertinent information:

1. It sounds as if you failed to or were unable to pay for the mortgage on the home. Is that correct? How long has the mortgage been unpaid?

2. Since this is a rental unit, was the home still occupied by tenants and were they paying rent? If rent was being paid, what extenuating circumstances prevented you from paying the mortgage money.

I understand that the rental home here in California may have dropped in value from $700,000 to $300,000, but there is no bank or government program of which I'm aware that will adjust the mortgage principal down for you to meet the lower value of the home. Banks will work with most homeowners in trying to adjust mortgage rates (not principal, but the interest rates) for a short period of time to help homeowners who are in distress with their primary residence and want to keep the home. If the homeowner cannot make payments on the mortgage, then the other option is for the seller to work with the bank in a short sale of the home.

Since this was not your primary residence, however, some of the protections afforded to homeowners who have had loans forgiven in short sales may not be available to you for your rental home. Your best plan of action, right now, is to speak with a qualfiied mortgage or credit counselor in Palm Beach for advice and help on what you can do next. You may also wish to speak with a real estate attorney here in California for assistance and to learn if you have any options available to you after the foreclosure. But, hurry, time is of the essence in resolving these types of matters.
1 vote
Terri Vellios, Agent, Campbell, CA
Sat Apr 6, 2013
David Hammerslough 408-261-4252 is a Real Estate Attorney. There are others as well.

The bank has to conduct the foreclosure according to California Law. The documents you signed when you got the loan gave them permission to foreclose. You also had a responsibility to make your payments on time. If you failed to make your payments they had the right to foreclose. When you got the loan did you get the loan based on being an owner occupant? Then you turned it into a rental? Did you notify the bank of your new mailing address?

As you can see there are several factors involved that we here on Trulia would not be able to advise as it is legal in nature and your best resource is to contact an attorney who will review your documents, what has transpired and advise you on your options.

All the best to you.
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1 vote
Elena Talis, Broker, Palo Alto, CA
Sat Apr 6, 2013
I wonder which bank was holding your mortgage and if you had a first and a second. Anyway, I would recommend you to hire an attorney in California to help you sort out the situation.
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1 vote
Norman Aless…, Agent, San Jose, CA
Sat Apr 6, 2013
I agree with Ann contact a local attorney here in California an get there advice.
At your service,
Certified Distressed Property Expert
1 vote
Anna M Brocco, Agent, Williston Park, NY
Sat Apr 6, 2013
In order to best protect yourself consult with an attorney who specializes in real estate, see exactly what options you may have.
1 vote
charles butt…, Agent, san jose, CA
Sat Apr 6, 2013
Thank you for your question:

As Ann Brocco, Allyson Alessandrini, Elena Talis and Terri vellios pointed out, your question is a legal question. As Real Estate Brokers. we are not permitted to answer legal questions.

The Attorney that Terri Vellios recommended is excellent. I recommend that you contact him.

Thank you,
Charles Butterfield MBA
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
FAX: (408)269-3597
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