Short Sale Nightmare! HELP!
Presently in a short sale nightmare. we were backup offer and bank counteroffered to the first and they withdrew their offer. Subsequently, our contract was supposedly submitted to bank by seller's attorney. We thought this would be a relatively painless process as our contract amount was nearly identical to what the bank was seeking in the initial first offer. Soon thereafter, seller advised their attorney to stall/hold up the deal (even though our contract was already into the bank for consideration). Seller's attorney indicated that PNC (2nd mortgagee) is seeking $21,000 in order to release the lien/deficiency, and that is what is holding up the deal. Seller is completely unwilling to put forth any additional monies. Although we, as the buyers, are willing to put forth money to the deal I have a feeling any $ will be scooped up by the first mortgagee. When I mentioned this to the attorney, they agreed but suggested that it would likely have to be outside of the HUD, which I know is completely fraudulent. It is clear from all of the seller's actions that he is trying to stall the deal as long as possible to delay the foreclosure action against his home. Finally, we have also never been provided any written documentation of either lender's responses and are receiving conflicting information. Here are my questions:
1. Can the attorney unilaterally advise BofA to place a hold on the short sale contract?
2. Aren't we as the buyers entitled to a copy of the HUD or written approval/denial by the first & the second mortgagee in order to negotiate with the lender? (we don't believe that the lender has ever come back with any offers on our contract. It appears that the sellers attorney is basing everything on what happened in the initial contract with the first offer)
3. Do we have the right to negotiate with the lender(s) directly? (Seller's attorney keeps making all these assumptions without allowing us to at least submit something to the bank).
4. What are our rights and how can we force this deal to close?? (Seller is attempting to stall and control this deal, when it should be the banks' that decide. Money is not the issue with this property).
PLEASE PLEASE PLEASE HELP.
Replies to This Discussion
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Permalink Reply by Jeff Payne on
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I don't really see where the seller is stalling. The second mortgage is asking for something that the sellers most likely can not contribute and the first is not allowing the amount that the second wants. One way to handle it is to settle the second now and then work on the first but you would be putting yourself at great risk if you settled the second now and the deal fell apart. Might be time to move on.
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Permalink Reply by TShot on
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It is illegal to put a house up for sale that a buyer is not intending to sell. Harry K. it is his legal perogative to sit and stay in the house but once he enters into a contract to sell the house, how does he have a legal right to not sell it?
It is illegal to pay any monies to the second off the HUD. if bank of america caught wind we could be prosecuted. They have a legal right to that money.
I would like to add that the lender filed a foreclosure action and he stalled it by asking the bank to short sale. Since then he has had 4 people walk away. They have put in BS offers just to keep the process going. He signed the contract to sell the house to us, we have the money to buy the house, but they are keeping us from negotiation. How is this legal?
Please explain where you get your information that says we do not have a right as a buyer to see the offers the bank is willing to except? we are giving them the money.
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Its not so much frustration as it is the inability for them to let us negotiate. We have the money but they are not letting us submit the counter.. They are making the decision for BofA and PNC instead of letting us submit a counter.. thats my point.. we do have written proof that their attorney asked us to commit fraud.. at this point i feel like we have enough evidence to have 2 or the 3 parties involved to be reported and prosecuted. I want to buy the house. How can we leverage that.
As far as the comment of what this forum is for, it is named short sale superstars. superstars are normally associated with the best in their field. So my assumption that i might actually be talking to a lawyer instead of a real estate agent making assumptions of what the law is must have been incorrect..
I thought i would get answers like what are our options instead of opinions. Like do we have an option to add an addendum showing more money going to PNC while still giving BOA what they supposedly want? PNC had BofA changed it from a freddie approval so the second did not have to follow those rules.. but again. they can't tell us what to offer, we have the right to offer what we want and negotiate no?
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Tshot, was their a contingency in your contract that said all offers must be approved by a third party (lender, investor etc)? You are making alot of assumptions and got some good feedback.
Here is my opinion. The seller is doing nothing wrong, there is no way that I would let you negotiate a short sale for me if I were the seller. When there are 2 mortgages involved, both have to agree and it can and is very difficult to get both to agree. I would assume that if the seller had the money that the second wants, they most likely would not be in a short sale situation.
How did their attorney ask you to commit fraud? I missed that one? If he asked you to settle the second outside of closing, that may or may not be fraud. There is no law that says that a second mortgage can not be settled and then a short sale completed with the first. Many sellers pay off their second before proceeding with the first.
Even if they let you submit a counter, which I think they should, the first is not going to let the second get that much from the sale due to Freddie Mac guidelines.
That is just my non legal opinion
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Thats all we want... we want the attorney to submit our counter.. don't legally they have to do it. As far as length of fight, i am in for it. I am just trying to get a clear answer. Our contract states that if both banks agree to waive the deficiency, the the seller agrees to sell the house. So we want to offer PNC what they want and BofA what they want. So if the agree to waive the deficiency, he has to sell the house no? Both Lenders have aggreed to waive the defiency if they get the dollar amount they want. we have it but we can not get it to the bank.. how is this ossible if we are willing to pay exactly what the bank aggreed to and the seller is contractually obligated to selling if this occurs.. I can show you the docs. The attorney told us the only way to make the deal work is by paying ONC outside the HUD because if we raised the sale price, BofA would demand the rest of the money. so we would have to do it without BofA knowing. That is Fraud.. no doubt about it. and that was from his attorney in writing. as well as many phone conversations with multiple people regarding this. Thanks for the continued debate
Jeff Payne said:
Tshot, was their a contingency in your contract that said all offers must be approved by a third party (lender, investor etc)? You are making alot of assumptions and got some good feedback.
Here is my opinion. The seller is doing nothing wrong, there is no way that I would let you negotiate a short sale for me if I were the seller. When there are 2 mortgages involved, both have to agree and it can and is very difficult to get both to agree. I would assume that if the seller had the money that the second wants, they most likely would not be in a short sale situation.
How did their attorney ask you to commit fraud? I missed that one? If he asked you to settle the second outside of closing, that may or may not be fraud. There is no law that says that a second mortgage can not be settled and then a short sale completed with the first. Many sellers pay off their second before proceeding with the first.
Even if they let you submit a counter, which I think they should, the first is not going to let the second get that much from the sale due to Freddie Mac guidelines.
That is just my non legal opinion
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The seller is who decides if they want to accept your counter offer and send to the bank. It is their home and they call the shots, they can reject your counter offer if they want to, which it sounds like they are doing. The deficiency is only part of it, both lenders have to agree to release the lien in order for the seller to sell the home. It is my understanding that Freddie Mac's policy is to not waive deficiency so that may also be an issue. That is not really known until the approval letter is in hand.
Your issue is getting both lenders to agree and it is highly unlikely that Freddie is going to allow more than 6% of the balance of the second to go to the second. Do you know what the balance of the second is?
As far as the attorneys trying to get you to settle the second. There is nothing stopping anyone from paying off the second mortgage right now. It does not come out of closing proceeds. Sellers pay off seconds all the time, the only difference in this case you would be risking paying off the second and the first falling apart. Not advisable.
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BTW, just for reference, do you know what the balance is for the first and the second and how much is the first asking for?
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The first is asking for 235k, PNC is asking for 18k + 3k that BofA approved to give them. The original amount of the second lien was 70k. We want to offer PNC a little less than that and see what they say. We also have the ability to attach an addendum showing extra money that we are going to give PNC to BofA. I still don't get how the seller can dictate what is offered to the lender if we have a signed contract to negotiate a deal and buy a house. The Realtor for the seller emailed me yesterday saying he had a higher offer. from what i can tell its the same situation they will have because BofA will ask for the additional money. PNC requested that it not be a freddie approval and BofA obliged. we have the ability to pay the 18k and the 235 but they will not allow us. My fiancée is an attorney but this is not her field. In the state of florida fraud is specifically defined as not disclosing any money on the hud that is used to pay the deal. Just because people do it, doesn't make it legal.. and i will make sure that at the least they are held accountable for that.
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You kinda lost me. What does it mean that PNC asked that it not be a Freddie approval and BofA obliged. If it is a Freddie Mac loan, BofA has to follow Freddies guidelines which I believe means that Freddie will approve 6% of the balance on the second. The seller can dictate what is offered to the lender because it is the sellers home, not the lenders. The lenders role is to release the lien and if the lender wants the seller to contribute or wants terms other than those that are on your contract, the seller has every right to not proceed. If you are in Florida I am sure that you used the Florida Association of Realtors short sale addedum that provides that the offer is contingent upon lenders approval of the terms.
I think you may be missing my point on the disclosing in the HUD. If the proceeds of the sale are to be used to pay off the second, yes it has to be on the HUD. To put it another way, it would not be illegal for a seller to pay of a second mortgage early would it? The seller can pay off the second at any time and if they did, the second would not need to approve the sale. So my question to you is, if the seller had paid off the second 3 months ago, do they have to disclose that on the HUD?
Regardless of everything else, you must have Freddie Mac approval of the amoung going to the second and at this time you do not have that.
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Permalink Reply by Bryant Tutas on
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TShot. Sounds like a mess. Place the extra money to the 2nd on your side of thew HUD as an expense. This does not increase the purchase price. It just increases your money to close. It could also be placed on your side of the HUD as a POC item (paid outsid of closing). As for getting directly to the bank to negotiate or submit your offer....you can't. They don't own the property and cannot make any decisions related to the purchase contract.
I highly suggest you seek legal advice. I don't believe you can EVER force a seller to sell in Florida. You do however have remedies for beach of contract outlined in the contract. An attorney can review this and give you an opinion of the way forward. That's really the only battle you have to fight. You have no control or rights on the seller to lender side.
Of course I am NOT and attorney and this is NOT legal advice. I'm just a stupid real estate broker :)
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Brian. TShot may very well have a contract and if the short sale is being handled properly, she does. The contract is between the buyer and the seller and is perfectly legal and binding. While I do agree with the rest of your statement I think you are jumping to a conclusion about there not being a contract in place. It's the short sale contingency that's causing the issue.
Brian Avery said:
Tshot, What you have is an OFFER to purchase a property not a contract. You are not in a legal contract yet because the contract has not been fully executed due to the fact the short sale has not been approved. Once again a short sale is between a seller and a lender. Regardless of the negotiation between the lien holders and the sellers, you have no input. The seller is the one responsible for the liens so of course they can dictate what is offered to the lender. "PNC requested it not be a Freddie Approval" ???? Freddie OWNS THE NOTE on the first lien . PNC has the note on the second. PNC cannot request Freddie not to approve etc. Bof A has to go by what Freddie wants. I am not sure what battle you are trying to win on this forum, but I encourage you to waist money on attorney fees!!
It is fun to bust your chops!
Brian
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Permalink Reply by Alyce Nelson on
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BoA won't allow anyone to "stall." As most have said, you cannot negotiate directly with the seller's lenders. This is neither an impossible situation nor a lost deal. Your buyer’s can bring the $21K to close, it just needs to be on the Buyer’s side of the HUD as "POC" (Paid Outside of Closing). Then it is not a side deal and it is on the HUD. We have never had this approach rejected. The attorney is correct; if you do not go POC the first lien will have a right to it. If your buyer's settle with the second and pay it ahead of time it falls into a very gray area of a "side deal" plus if the sale falls through your buyers most likely have no recourse to recover the money paid to the second lien. If I were you, I would not want that liability as an agent. This is not an impossible situation; an experienced negotiator will know what to do and can get this through to close. All the best!
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