Tip 19-2012: Insane Short Sale Story
We all know that short sale lenders are overwhelmed, and take too long
to review and hopefully approve a short sale. But what happens when the
short sale negotiator simply screws up and drops the ball? You will
not believe this story:
The short sale contract was $164,000 with no contingencies. The
lender's BPO was $162,500. The outstanding first mortgage was $176,000,
with a second at $43,000. The second wanted $6,000 and the first only
offered $2,600. To satisfy everyone, all parties, including the
realtors, agreed to contribute an extra $3,400 towards the second
lender's requirements. It should have been very simple to get an
approval.
Unfortunately, that did not happen. The short sale negotiator for the
first lender, after many, many lender mistakes throughout the process
would not postpone the foreclosure. She actually stated that, "the
foreclosure would be better for the Borrower.".
Guess what happened at the foreclosure sale? The bank only bid $126,500
and the property was sold to an independent third party for a dollar
more. The second lender got nothing. Now the Borrower has an
approximately $50,000 deficiency with the first, and a $43,000
deficiency with the second.
The first only received a net of approximately $122,000 instead of the
approximately $145,000 if they had accepted the short sale contract.
The only person who won was the successful bidder at the foreclosure who
ultimately sold the property for a $40,000 profit!!
This story
is not uncommon. Short sale lenders need to have someone of last resort
who can override a negotiator's "insane" actions and decisions. Where
are the grownups?
Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions. Thank you for allowing us to send you this email.
Please feel free to share this tip on your social media sites (buttons above.)
William D. Tucker, III
Charlottesville 434-973-7474 | Lake Monticello 434-589-3636
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