Can a bank continue with a forclosure, when i have an offer on it while its a short sale?

Asked by Mtobler2006, 34135 Wed May 26, 2010

Wells Fargo says they want to forclose on the house im trying to buy. They want to forclose today and my Agent is extremelly worried im going to lose the house, even though my offer is just above what they want to net from the sale. I thoght forlosures take forever, but my agent says "Wells is trying to make this the fastest forclosure ever". But she also thinks they cant go through with it because my offer hasnt been approved or denied yet. Can the bank still foreclose? or should the seller fight it?

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Scott Godzyk, Agent, Manchester, NH
Wed May 26, 2010
Yes, the bank has different departments within itself that do not work together, ones job is to work the short sale while the others is to complete the foreclosure. The foreclosure process is rather simply and takes a lot less time than a short sale.

As far as your offer, you state your offer is above what they want t to net. There are many myths with short sales and one is teh bank will not state what they want, the only way t o tell is if teh accepted a short sale and the buyer backed out or if the countered a previous buyer who was lower, you can use that info in the future to write a new offer,

There are a few steps that short sales follow. The agent not the bank sets an asking price, The asking price need to be ta or near the true market value in todays market. This amount should not be less than 20% lower than what the seller owes. Once an offer is submitted, the negotiator for the seller submits the offer, prequailification letter, a preliminary hud and net sheet showing what the seller will get at closing with this deal. The bank orders a bpo to check to see what is the market value of the property today.

After going over everything they will accept or counter with what they will accept. Make sure this is in writing and saved by the bank. Nothing verbal counts.

If the short sale was a good one for teh bank, they can delay the foreclosure. You should know with a short sale banks only lose, if tehy go to foreclosure, if there is PMI, then the banks gets paid back, they dont lose.

I wish you luck in working things out
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1 vote
Tish Thompson, Agent, Manassas, VA
Wed May 26, 2010
Yes they can, and they do it all the time. The decision for the bank to foreclose is strategic and it's made by the investors who backed the loan on the property.
1 vote
Beverly LaLo…, Agent, Bonita Springs, FL
Thu Feb 24, 2011
Were you successful with this purchase? I'd love to know because Bonita Springs is my home base.

Please email me at Thank you!

Bev LaLonde
Broker Associate
American Brokers Realty Group
0 votes
Tim Cahill, , Arlington, MA
Wed May 26, 2010
Unfortunately yes. A short sale does not stop the foreclosure process in any way, as others have already pointed out. The sad part is, your buyer's agent should have informed you of this possibility from the very beginning. It underscores the need to work with an agent who's received training in short sales because it's not your normal purchasing process any more.

Best of luck!

0 votes
Alma Kee, Agent, Tampa, FL
Wed May 26, 2010
Absolutely and as Scott pointed out, if there is a Private Mortgage Insurance, the actual investor that owns the mortgage (probably not Wells Fargo, they are normally just a "servicer" middleman) may proceed quickly to foreclosure since they can collect on the insurance for their loss!

Keep looking and you may want to narrow your focus to homes that can actually close. Bank owned properties are the best deals out there and if you find one that needs fixing up you can get a 203K Simplified FHA mortgage that will allow you to put in new carpets, fresh paint, new roof, new appliances, etc. As long as the total cost doesn't exceed $35k and there are no structural repairs it is a fairly simple process. And... if you're going after bank-owned, a 203KS mortgage gives the asset manager more comfort that the deal will not fall apart because of the condition of the house.

Hope this helps you.

0 votes
Robert Robbi…, , Pinehurst, NC
Wed May 26, 2010
Speak with a lawyer but, I have had two of these and in both cases the bank said they wanted to continue with forclosure. Here in NC the person holding the mortgage can step up any time and pay off the note which efectively stops forclosure. Now if it's a short sale it's a whole different ball game because then Wells Fargo has to approve the short sale. It looks like they aren't going to do that.
Forclosures all have legal proceedures that have to be followed. Here in NC the trustee has to get the judge to order the sale and after that is done there are other things that have to be done prior to the auction. Even after the auction there is a waiting period. Durring all of this the mortgage holder can step up and pay the note stopping the sale. There are legal issues to deal with a real estate lawyrer would be a good person to talk to right now. They can advise you on the legal proceedure.
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