Well Bank of America did it again. They foreclosed on a home owned by a single mother of five children, one a newborn last Monday after we were told numerous times that her short sale was approved.
This hard working mother of five commutes to work every day from Victorville to Manhattan Beach, a 103 mile one-way trip in order to keep a roof over her family’s head. With the job market in such a slump she cannot afford to risk her current employment and has been making this commute for nearly 4 years now. Until now.
She attempted a loan modification with Bank of America two years ago but was declined. She attempted the process again only to be turned down for allegedly not returning her documents to the bank by their deadline. When we met her earlier this year, her loan was not in default yet. With the news of her recent pregnancy, she began falling behind in her mortgage payments.
In April 2011, we listed her home in attempt to short sell it so that she could retain some hope of home ownership again by making every effort to avoid foreclosure. I am a HAFA certified real estate broker trained to work out short sales. She was a prime candidate for the program.
In May 2011, we received a full price offer on her home at $99,000 all cash. She was also served with a notice of default that same month from Bank of America. We tried to assure her the best we could that the short sale would be approved and not to worry about the bank foreclosing on her. We had plenty of short sale negotiations on homes with Bank of America that have been postponed for months if not years before the threat of foreclosure.
After submitting her complete short sale package, the new offer and estimated HUD-1 through the Equator system, we received a counter offer from the negotiator basically accepting the terms of the purchase agreement with some minor tweaks. The closing date was to be completed by September 23, 2011. Not a problem. We accepted all the terms. This was in July 2011.
This process was moving along quite quickly in comparison to other files we have worked. But no indication of any red flags or reasons to question the system. After submitting her most recent updated pay stub and bank statement, Bank of America stated that they were waiting on final investor approval before we would open escrow.
On August 10, 2011 she received a notice of trustee sale notice posted on her front door. The sale date is scheduled for September 6th at 9:00 a.m., the day after Labor Day (no pun intended but ironic since she just gave birth to her new baby boy).
We began to call the negotiator immediately in an effort to postpone this looming sale date in light of the short sale approval we were waiting on. Bank of America assured us that the foreclosure date would be postponed but that it may not show up in the system until three days before the sale date. We called the trustee directly to verify that the sale date had not been postponed yet. On the first of the three days before the sale date we began to make repeated calls, email requests, Equator notifications regarding the pending sale date. Each time we are told that it should be postponed at any time. The trustee notifies us that an opening bid has been published for $64,000. What? How could that be possible when Bank of America is working on the $99,000 all cash offer we submitted two months ago? It must be a mistake. We kept calling.
Bank of America did not postpone the foreclosure sale as it promised to do. The home went to sale for $64,500. Oddly enough, it was not purchased by a third party. It reverted to the beneficiary to be sold as an REO. Fannie Mae failed this hard working woman, Bank of America failed her. And ultimately, we failed her miserably too.
How could this happen? What could we have done differently? We are attempting to contact the asset manager for Fannie Mae to inform them that we have an offer for $99,000. Bank of America told us that it would take a few weeks for the property to be assigned. I didn’t believe that and was correct when I was told that Fannie Mae introduced himself to my client by knocking on her door with the news.
My head is still spinning with ideas and attempts to understand why this home went to sale without a single postponement when so many others we have with Bank of America are declared “cancelled” for other unknown reasons. I’m furious and saddened by this foreclosure system we are forced to bargain with. Any thoughts?
DISCLAIMER:
****DIANE WHEATLEY IS NOT A LICENSED ATTORNEY. THIS INFORMATION IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION PROVIDED HERE.****
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I feel for you, I went through a heart break a few months ago. This was an older couple, he had worked very hard all of his life, but now was terminally ill and could not work. It was a BofA home and we got a full price offer 63 days before foreclosure. I initiated the shortsale but before a negotiator could be assigned the equator site went down and by the time it came back up we were at 59 days before the foreclosure date. Offers can not be submitted on a Fannie Mae within 60 days of a foreclosure. (How stupid is that) The equator system was locked up and to make a long story short I was on the phone everyday for a month and had every supervisor from equator and bof A postpone the foreclosure so the equator system could open up the new links. We got the negotiator got the short sale approved and it was "At the investors for approval" Fannie Mae never responded! In the end this went back to fannie mae 3 days before we were to close escrow and the homeowner literally rolled her husbands hospital bed into the street.
By the way that home is on the market now unsold and listed for less than what the approved offer was.
One thing that may have helped if I had found out in time was the Making homes affordable HOPE HELP line 888-995-4673 http://www.makinghomeaffordable.gov/pages/default.aspx They can be very instrumental in short sales for both the homeowner and the agent. Anyone needing a little muscle should contact them.
I am so sorry this has happened to you and to all the other people that found themselves in a bad situation.
Diane,
Good job fighting it tooth and nail and doing everything you could for your client.
Unfortunately, no matter what you do, getting a foreclosure rescinded is very difficult to do and honestly rarely goes through even if you can get them to re-open the case. Often times there are MI issues at that point that you have to factor in as well.
16 Months is a long time, Fannie has started cracking down on postponements as they feel they have to cut their loss at some point. I agree with the thought that it is BS how much the banks worry about fraud, but at some point they just have to draw a line because they can lose more money by sitting on a property too long while getting jacked around by agents. Very frustrating tho when you have a legit deal that is better for them than foreclosure and they foreclose.
As for the clients, they still have so much to be thankful for to you. I think a foreclosure for 16 months rent free isn't the worst deal in the world. Not that foreclosure is ever a good thing..
Well I guess I need to accept that this short sale listing of mine has no chance of recovery from the grip of Fannie Mae. I contacted all the contacts that Joshua was so generous in sharing with me and we received a response back this morning.
Get this one! I was told that the reason that they did approve the postponement of the trustee sale was because Fannie Mae guidelines state that when a homeowner has not made a mortgage payment in 16 months, then it must go to foreclosure. Sorry! Fannie Mae guidelines overrule.
Whatever!!!!!!! So Fannie Mae guidelines state that they are to take an immediate $35,000 loss on a property that they could have sold for $35,000 more through a short sale that was weeks away from closing? Coo-coo! Have you every heard of such nonsense? Thanks a million Joshua but that is what I'm left with. Now my only hope is to locate the asset manager to find out who the assigned agent is so that I can present our offer on the REO side of the coin. Can we spell stupid? A-S-S- you get the picture.
Diane,
I've been there, it's terrible. Not only does it hurt the seller, but also you have to handle the stress of letting them know, and on top of that, you have worked your butt off for months and now you don't get compensated. It's the bank's fault, shame on them..
In answer to your question about what could have maybe done differently or can be done differently in the future.. When I am within one week of a foreclosure sale date on any of my listings, and the sale date is still now showing postponed with the trustee, I immediately escalate to the investor to make sure they are aware of the situation and that they have received the request to postpone. Unfortunately, Fannie Mae has not been postponing foreclosure sale dates lately unless the deal already has Final Approval. Because you didn't have final approval, and were in investor review when the sale date came up, they foreclosed. It is a silly thing that Fannie Mae is doing! It has actually been in their guidelines for over a year, but not until recently did they begin to enforce it. None the less, it was either Fannie Mae who rejected the postponement request and decided to take less money with foreclosure, or it was Bank of America who failed to submit the internal request to Fannie Mae to postpone the sale, either way, shame on these banks! Their wrong decision caused a family to go to foreclosure, a home to sell for less than it should have(and thereby hurts the neighborhood values even more), and they themselves lost more money than they would have had they do the right thing and postpone the sale date to give time for final approval and closing. AND it hurts all of the American Tax Payers who bailed out Fannie Mae...Sheesh. I am truly sorry that this happened to you :/