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Bankruptcy, judge to okay our SS contract, loan Modification, will they foreclose??,

Posted by Tanya Spotts on November 6, 2012 at 11:29am in Short Sale Discussions

I cannot believe this is happening, but if anyone can explain what the chances are that my sellers will be allowed to get a loan modification and keep their home. I hope SPS is really telling the sellers the truth. I am so affraid they will get foreclosed upon. After having declaired bankruptcy several times, and have not paid their mortgage for over one year, my sellers were contacted yesterday by someone at SPS, and were told they are willing to take a look at them and possible modifiy their loan. I find this so surpprising since it has taken the short sale department 7 months to completed a second BPO so we can finally get the approval to agree to accept our contract.

Does SPS normally do a loan modification after this much time has elapsed and a sjhort sale contract has been in their hands for 7-8 months with a buyer waitng to close anytime.

Please advise, are they going ahead with loan mods, while in the middle of short sales?

thanks, Tanya

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Replies

Gregory Holmes November 11, 2012 at 3:38am

Agree with SE - the reach out for a loan mod is for appearances sake at this point - servicing companies are even worst at loan mods. than SS's - and yes they will foreclose in a heartbeat. Get the short sale approved before a FC date gets set and close that puppy.
SE Davis November 11, 2012 at 2:34am

This has happened recently to more than a half a dozen of my clients.

In every single case they were denied this new opportunity for loan mod. These LM denials came back fast and hard.

It is my opinion that this is an attempt by servicers as an "appearance of compliance" with the 50 states settlement and other litigious issues some of these servicers, lenders and investors are facing.

You can safely say that there is not a snowballs chance in hell that your short sale client will be approved for this late date loan mod offer.
Bryant Tutas November 7, 2012 at 2:27am

It's quite common for lenders to reach out to the borrowers to see about a loan mod. They have to offer foreclosure prevention options to the borrowers. It really has nothing to do with whether or not the short sale will be approved.

My experience is that loan mods are rarely given. However if the sellers want to try and keep their property then they may want to give a loan mod a try. This option should be eliminated prior to listing a short sale.

Just discuss the options with your seller and let them decide what they want to do.

A loan mod, unless with substantial principle reduction, is a band aid. A short sale is a permanent solution.