Tip 25-2012: Simultaneous Short Sales & Foreclosures
Many lenders, while actively negotiating a short sale contract, are still continuing to proceed with a foreclosure. Normally the lender will postpone the foreclosure, but usually it's only days before the scheduled foreclosure date. Unfortunately, there are certain instances when investor guidelines will not allow for a postponement because the short sale lender has not approved the contract yet.
What a stupid system!! You would think by now with several years of short sale experience the "right hand" negotiating the short sale and the "left hand" pursuing the foreclosure would communicate with each other. After all, it is the same lender. Why increase the costs by pursing a foreclosure, when the lender should be cutting it's losses by accepting the short sale contract?
Instead of the short sale lender using its limited personnel to negotiate the short sale, everyone wastes their time (the lender and the law firm or realtor negotiating the short sale) trying to simultaneously get the short sale approved and stop the foreclosure. In spite of this problem of unnecessary foreclosure activity, it is in everyone's best interest to attempt a short sale, rather than simply "walking away" and allowing a foreclosure.
PS: In our recent experience, we have to stop foreclosures in about half of the short sale contracts we negotiate. In fact, with some lenders, we have had to stop as many as six foreclosures before the lender finally accepted the short sale.
Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.