Sellers Bailing on SS last minute, need some advice!
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.
Replies to This Discussion
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Permalink Reply by Esther M. Camarotte on
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I could not agree more! The statistics are that they will foreclose because they never catch up. These attorney's should be fined for doing this. I have the same thing just happen but we had not yet received the approval. What I have seen the last 10 years of doing short sales is the bank actually calling somewhere in the middle of our short sale and promising a loan mod, getting some money out the homeowner and then moving forward with the foreclosure. I then get the call a week before the courthouse sale date asking to step back in and help. I always have it postponed but it is an emotional and exhausting process. Jayne is right these people are nuts. My question is always why to you want to hold on to something that is many times 1/2 the value you think it is worth? Sell and move and rebuild your life the stress will be released and life opens up.
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Permalink Reply by Sherry Pyszczynski on -
The other issue you want to bring up, is that the buyers agent brought a willing, ready and able buyer to the table. You do have bank approval. The commission is due to your broker, who is now liable to pay the buyers broker.
What are the chances of a loan mod going through prior to sherriffs sale?
After the sale, the bank would have to rescind the sale in order to do a loan mod, which I have never heard of happening.
What a mess! Good luck with this one.
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Permalink Reply by Davey on
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No one gets paid. The bank made you put a clause in your listing agreement saying they could pull out anytime. BOA is terrible. If you change over to short sale before the auction date they will foreclose . BOA is p
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Wait to get an extension and after the foreclosure date. Then put it in Shortsale status. That gives you enough time to work the Shortsale. The bank is cold. They will keep requesting more docks. I would request for the loan to be transferred to a different servicer. BOA is playing games. Then you can get the Shortsale done.
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Permalink Reply by Kathleen Lordbock on
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Do keep us posted on how this one goes down.
To me there could be a lot of money owed to brokerages and the buyers, if the sellers now try to go in a different direction. With the time frame to the close &/or the Sheriff's sale- I would not give them much of a chance for a loan mod but I am not an attorney and apparently they have now found one who can work miracles.
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Permalink Reply by Investor702 on
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Wow you have really resolved these peoples issues and it seems that they are undecissive and need your direction. You need to sell them the benefits of what has now been accomplished. A lawyer can promise to save their home all day long only because once he gets some oposition or delay in the modification he can switch the strategy to a chapter11 bankruptcy. At the end of the term of the bk they will be in this same exact situation once again. There is no benefit to them in a loan mod, bankruptcy or foreclosure. Good luck my friend your only solution right now is to sell them on why they first came to you.
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I had a similar situation with a seller (no early move-in). I have all my clients see an attorney for a consultation before taking the short sale and, in Arizona, Designated Brokers have access to our association's attorneys. I called both attorneys, both of the attorney's told me to tell them there could be serious consequences including lawsuits and that they need to consult an attorney about these consequences prior to making a decision. They both told me to communicate in writing only and not to give any advice other than the need to consult with an attorney about the consequences. Remember, what ever you say or do (even if you cause they to go through) could end up in court. Be careful.
I would add that, typically brokers in Arizona will not allow early move-ins for any transaction, since we seem to have Murphy's Law and it causes another set of issues.
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Permalink Reply by Tony Morales on
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Murphy's Law....This is why you NEVER let a buyer move in prior to closing. They probably have incurred many expenses and notified relatives of their new address. And what will they do with their renters? Did they sign a lease? In California, the buyer has to remove all contingencies prior to closing. If they have not then the seller can cancel the sale. If the contingencies have been removed then the Buyer, through their agent, sends a Notice to Perform to the seller. If seller does not agree, then time for an attorney. who may file a lis pendens action which may stall the foreclosure sale and prevent the bank in pursuing the modification. Also, in California, as of Jan 1, 2013, a new law (SB 900) goes into effect that prevents banks from foreclosing when the seller is in a modification review or short sale.
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Wow Deja Vu! I've had this happen with both attorneys offering loan mod help and the banks. I now insist that my sellers have attempted a loan mod first, unless they have no desire to keep home due to divorce or long distance relo. That way you know if they are even eligible. In California our contracts/disclosures allow seller to bail for almost any reason. However, it had better be worth it, or you'll end up losing the house to foreclosure. Had a bank offer loan mod to my client twice in the SS process even though their expense to income ratio was over 70% and would never qualify. Finally let us re-list as SS, but bank would not postpone the Trustee Sale as it had already been postponed "too many times" during the loan mod process. Home sold on courthouse steps though we had a good offer submitted. Seller was OK with that as she got a decent amount of cash for key and we kept her in the home long enough to re-locate smoothly.
Mike
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Permalink Reply by Pam Graham on
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Sounds like the sellers are past the point of a loan mod. They should have thought of that before they entwined other lives into their situation:
1. Their new landlords, who they have signed a lease with that is a contract.
2. Their buyers who have moved in early.
3. The buyer's tenants who have rented the buyer's home.
4. The agents for doing their jobs.
They need to talk to attorney, but they also need to take a hard look in the mirror and do the right thing.
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Be very careful here. You don't want to give them what could be perceived as legal advise. An attorney is telling them something different. Could you have a meeting with the seller and attorney so everything is laid on the table?
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Permalink Reply by Tni LeBlanc (805) 878-9879 on
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Has this attorney advised them about their liability for cancelling at this late in the game?
And what about the tax issues if they try short selling later and there is no tax forgiveness at that time?
Wow, these folks need to consult with another attorney (not just the loan mod attorney) and fast before they end up in a world of hurt. They've signed a couple contracts here and people have relied on them -- what makes them think they can back out now and try for a loan mod without consequence?
On another note, I expect to see a lot of litigation about these issues, as people are doing this more and more when banks finally cut them principal reduction deals here and there. As a short sale seller,once you approve the short sale terms of approval and convey that to the buyer, you really need to consult with counsel about cancelling a real estate contract.
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