I have a BOA approved SS that is set to close. The second lien was removed due to national mortgage settlement act and the file is in BOA's closing department. Sellers have moved out of home and we have executed an early move-in with the buyers. Everything is set to close....Sellers call last night and want to cancel the SS due to a lawyer telling them he can save their home with a loan modification.  I pursued these options and the only thing that has changed would be the forgiveness of the 2nd Lien.

BOA says the SS would need to be canceled and then start over with the loan mod.

Is a Loan Mod a possibility for them this deep into the deal?

 

-Sellers have moved out and are in a rental

-Early move in executed with buyers.

-Buyers now have renters in their home.

-2nd mortgage was only $300/month(now forgiven).

-Closing set for, on or before Dec 27th, 2012

-Sheriffs sale set for 1/17/13.

 

Any feedback would be much appreciated before I go to counsel my sellers of the situation they may be getting themselves into.

 

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It is very likely too late for HAMP with the foreclosure sale date already scheduled.

I would have them consult with a RE Attorney to see if they can cancel their Contract with the Purchaser without risk of suit due to this change.

I appreciate the input and I will keep you guys posted as to how this is handled moving forward.

I wouldn't put too high of hopes into a modification.  The investors often have more to gain by getting the property off the books through a short sale or taking the home back through foreclosure. 

Whomever contacted the seller is likely interested in an upfront fee to help with the modification paperwork, however a principle balance reduction is highly unlikely so it will depend on the seller's motivaition as to whether they should risk the sale in this effort. 

I would advise the seller's to move on, however if the home has a great deal of sentimental value, and they would be ok with 'renting' in the way of an affordable mortgage payment on a property with no equity... at the risk of the perminent foreclosure record and possible eviction... in the end the choice is theirs to make.  It would be pretty hard for anyone to sue for non performance... at least in Minnesota.  Can you imagine trying to force someone to sell something that they have decided not to sell?

It depends on the language in your short sale addendum.  Ours in FL gives Sellers the right to decline to move forward with the short sale upon receiving the approval letter if they feel the terms are not favorable.

Absolutely! The buyers have agreed to buy, and the sellers have agreed to sell. This is where many agents get so messed up. It's in the contract. ...kind of like Prego - It's in there!  The sellers need to understand the legal consequences from the buyers, and the other brokerage involved, if any. Further, what if you do go down this road and the attorney begins working with them only to find, once again, they are not eligible. Now, you're risking legal suit from your own sellers because you caved in too easily, they have lost the buyers, and the bank is taking their house!  If this so called "attorney" knows the details, i.e. the executed contracts, the agreement for early move-in, etc., then he will advise appropriately and back the Hell off. ..assuming he's an attorney who is interested in advising his clients properly as opposed to an attorney who only wants to make a quick buck off these people. The attorney needs to be made aware that it's too late - move on - and find someone else to work with. And, you need to do what's best for your clients - close the short sale! Otherwise, if they're adamant, get signed releases from your sellers making them aware of the legal ramifications and walk away as fast as you can. CYA!

My .02

First issue: is the seller still legally obligated to the contract-contractual time periods for approval, does your SS addendum obligate seller if no deficiency waiver is granted, etc.  If owner is till legally obligated, obviously the buyers will want to pursue.

Second issue: The value of a loan mod, assuming no principal reduction, looking at how many years it will take to not be under water....verses the value of moving on, avoiding issues with buyer, seller's new landlord, etc.

 

This is EXACTLY why every seller I have is REQUIRED to have an attorney.  They attorney will talk sense into them, and the angle I would take is that if they leased their home, they cannot break that lease and get the renters out.

Not all attorneys.  Some of them are greedy bastards who want to charge them a retainer fee to do the loan mod (which may or may not work).  I'd have them get a 2nd opinion from a real estate attorney that you know and trust, not one just trying to make a buck on a loan mod. 

Excellent advice.  One of my pet peeves is an attorney who advises a course of action that is not necessarily the best course for the client but is one that will generate more fees for the attorney.  It happens a lot more frequently than you would think.

Along with everything everyone has posted here because they are in a contract with the buyers, what about their responsiblity to the lease contract they are currently in.  Do they not realize that is also another financial contractual obligation they will have to fulfill?  Just another idea to let them know they just can't walk from that either.

These people are nuts- they could lose out on everything. Almost NO loan mods work. Sellers end up in a trial paying more that the original payment , all back payments,late fees etc are added to the loan and they will still owe more than it's worth. 80% of trial mods fail and 60% of permanent mods fail. I used to do mods before we were banned and I have not seen a B of A loan mod yet that I would encourage a seller to persue. They are just grabbing at straws. The mod application does not stop the foreclosure process. Also the mod was probably offered based on them living in the home.Also, I hate to say how many attorneys have lost the property for my customers....promise them the world, take their money and fail to secure a mod

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