My house is in foreclosure. The lender said no to my modification because the investors said no. Can't qualify for any programs. What to do?

Asked by Cyorkly, 60637 Tue Feb 21, 2012

Have been saving money to purchase a new home with cash. I thought I could have a friend to do the short sale and sell me the property back. Just a ideal?

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Mike Castle, Agent, Capitola, CA
Tue Feb 21, 2012
BEST ANSWER
First of all, do not try to buy your home back. You will need to sign an legal document that states the transaction will be arms length. You could get hit with all sorts of civil or criminal penalties or actions if you sell your home in a non arms length transaction, yet signing an agreement that states it is an arms length transaction. Thats fraud and you don't want to travel down that road.

If the home goes to a Trustee's Sale, you can buy it back without penalty, and perhaps at a very good price, much less that what you owe. If no one bids on the home at a Trustees' sale, it will most likely be listed with a real estate broker at a very competitive price weeks down the road. You would also have the opportunity to make an offer on it at that time. Since that names match, the lender would look very closely at the purchase documents and might be biased to another offer if in a multiple offer situation. Some banks or aset managers may not allow a sale back to you, it depends on policies of the investor who makes the final decision.

If the loan modifaction is not allowed, you can try to refinance it with private or governemnt sponsored programs. Or you can complete a short sale if you qaulify for one with your lender. Most Realtors can handle this for you, but you need to make sure they have experience in processing short sales and have a high sucess record. You can also file for bankruptcy which will stop the foreclosre temporariy, while you try to work through the issues. This is an extreme measure and you need to consult a bankruptcy attorney and a credit couunselor before choosing this option. Good Luck! Mike Castle Realtor, Certified Short Sale Specialist,
American Dream Realty, Santa Cruz, CA License # 00620895. Over 30 years of real estate sales experience(831) 588-1988
0 votes
John Van Hog…, Agent, Portland, OR
Tue Feb 21, 2012
Sounds like a plan with pitfalls Cyorkly. California (Orange County) is the state I am licensed in, so I can't speak specifically to the practices in your state...looks like IL. Some states require a judicial foreclosure - involving the courts - and others do not. California is a non-judicial foreclosure state.

In California, once a Notice of Default is received, there are only a few paths open to homeowners; a) cure the default and get current, b) foreclosure or, c) a short sale.

When lenders agree to do a short sale, most will insist that all parties to the transaction sign what is referred to as an Arm's Length Addendum. This generally states, among other things, that all parties are unrelated to each other, that the seller will receive no proceeds from the sale, and that the seller will not rent back or re-purchase the property. If the lender discovers a seller in violation of the addendum, they may have recourse. That's the risk.

Have people tried to do this? Probably. I have no knowledge of it occuring but have had people ask. I always advise against it. Your very first step is investigating whether your hardship qualifies you for a short sale and discussing your options with a qualified Short Sale Realtor in your area.

Good Luck
1 vote
Jose Hernand…, Agent, Chicago, IL
Thu Apr 5, 2012
Whatever you do DO NOT make any special arrangements to buy back your home, this could qualify you for free housing in the Big House.

Interview a few good Short Sale agents in your area and talk to your lender about a short sale. Since you didn't qualify for a loan mod, you may qualify for relocation assistance from your lender.

Jose Hernandez, sfr
Coldwell Banker
312-788-7079
0 votes
Evelyn S. Fr…, Agent, Chicago, IL
Thu Feb 23, 2012
Hello Cyorkly,

You may have some options, but buying back your own property in a short sale is not one of them.

It appears that a short sale is your best option provided you qualify.

Interview a few agents that work with short sales on the list side, myself included. Start with the ones that responded to your querry right here on Trulia.

Good luck!
0 votes
Joe Schiller, Agent, Chicago, IL
Wed Feb 22, 2012
anything like that will land you in jail for bank fraud. You lost your home.move on or come into my office and I will short sell it for you and limit your credit damage, your ability to buy in the future dammage, you collection damage to the lowest possible level. Do not use your friend, use me because this is your life and you need #1 guy working for you
Web Reference:  http://www.joeschiller.net
0 votes
Matt Laricy, Agent, Chicago, IL
Tue Feb 21, 2012
I would speak with an attorney as soon as possible.
Web Reference:  http://AmericorpRe.com
0 votes
Bill J Delig…, Agent, Naperville, IL
Tue Feb 21, 2012
Keep on saving your money and be prepared to purchase a home for Cash. Your only responsibilities will be Taxes and Insurance.

Do you want to save your current home?
Have you listed it for sale in order to try to do a Short Sale? - As per your future credit history, a short sale is better than a foreclosure to have on your file.

As per friend buying your place, keep in mind you will have to sign a form called the Arm's Length Transaction stating that you do not have a wink wink deal with someone else.

Talk to an attorney that knows the ins and outs of this process. They may be able to help guide your decison making process.
0 votes
Philip Sencer, Agent, Chicago, IL
Tue Feb 21, 2012
Before you do the 'free' consultations you should speak with an attorney and/or accountant to go over the 'legal' options and tax consequences of potential options. Those folks do not respond on trulia. The bank has the option to go after you and your asssets for any deficiency that results in a short sale, but that is why you need legal advice. All R E agents do short sales
0 votes
Sergiusz Zgr…, , Chicago, IL
Tue Feb 21, 2012
There are still options available for you. At Newman Realty we specialize in foreclosures and shortsales. Mail me at sergiusz@newmanrealtyillinois.com for free consultation.
0 votes
David Hanna, Agent, Chicago, IL
Tue Feb 21, 2012
I think we all agree there is no easy answer here for you. but, somewhere in all of this lies an opportunity for a new start and a path to repaired credit, the most important asset you can have in today's world.
How you accomplish this, and in what time frame is dependent on a host of questions and your answers. If you'd like to spend a few minutes on the phone, we can go over how you can make the best possible decision.
Feel free to give me a call or email me for more information.(773) 732-9123
0 votes
, ,
Tue Feb 21, 2012
You may still have time to do a foreclosure defense. Feel free to contact me with any further questions. I can refer a real estate attorney. 708-699-9776
0 votes
Tony Reyes C…, , Chicago, IL
Tue Feb 21, 2012
You have a few options visit http://www.tonysells4u.com or call888-410-6070 to set up a FREE consultation
Web Reference:  http://www.tonysells4u.com
0 votes
jeff donnell…, Agent, Chicago, IL
Tue Feb 21, 2012
In most cases that would be illegal since it would not be an arms length transaction. I have extensive experience with short sales. Contact me and we can talk further about your specific situation and what I can do to help. jeffdonnellan@gmail.com 773-828-8151
0 votes
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