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I recently saw a blog where the statement was made that, "Most banks will not stop the foreclosure process and start the short sale process until you have an offer on your home."  Our experience is that this is inaccurate advice - let me explain.

The delinquent loan process at the lender has evolved into a two track system. The first track (think a railroad track) is what I call the FORECLOSURE EXPRESS. The lender has come to realize that the loan mod and short sale processes are seldom successful the first time around, are sometimes fraught with ill-intentioned borrowers seeking to drag out the process of losing their homes (or income property), and get tied up in the backlog of the attorney's office and Clerk of Court's office.  Thus they put the foreclosure in process "no matter what".

The parallel track of the process is the short sale or loan mod process. This railroad track has chugging along the "LITTLE ENGINE THAT COULD".  This engine needs all the help of the broker, seller, attorney and closing agent to move this through the process.

The problem is the FORECLOSURE EXPRESS needs to be slowed down. That does NOT happen with the introduction of a short sale!  It is still a race. 

Well, you say - this just is not logical.  LOGIC!?!!!? When was the last time you used logic in a short sale process with the lender - and you were right???????????

The fact is, unless you yell and scream, and maybe not even then, the foreclosure track does not speak to the short sale track.

So, I think it misleading to simply say that when you introduce a short sale to the lender the foreclosure is stopped, is very misleading and frankly, just incorrect advice.

Copyright 2010 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com  New Website www.Florida-Counsel.com. 

See our easy to understand articles at:

TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES

 
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13 Comments on FORECLOSURE EXPRESS VS. LITTLE ENGINE THAT COULD

MAY
15
2010
1,017,121 Points 25 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

 I don't understand your post. . I have successfully stopped banks from foreclosing a property in a certain date because we had a short sale offer. The yelling and screaming is a method we have to use, I agree with that. . . . by we did stop foreclosures before.
7:47am • #1
937,108 Points 361 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hi Richard. If you go back and read my post you'll see that the part you quoted are NOT my words. It's part of an ad that is the premise of my article. I still love you though :)

I completely agree that having a contract on the table will not stop a foreclosure. The foreclosure process, at least in Florida, keeps right on moving forward. However it has been my experience that the best way to POSTPONE the foreclosure is to have a contract on the table.

My post is about the unethical and perhaps illegal practice of submitting fake contracts to the lender and advertising that this will stop a foreclosure.
7:56am • #2
1,017,121 Points 25 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

After reading Bryant's post. . now I understand it.
8:07am • #3
146,218 Points 38 Featured Posts Outside Blog Attended Rain Camp

Good Morning BB!

OK, I now see that the paragraph AFTER the headline is also from the other "ad".  Nonetheless, if I read it as a statement of fact, then others might also - maybe use quotes (" ") around the whole section?

I do absolutely agree that having a short sale negotiation in progress with the lender is a factor in stopping a foreclosure, but there are plenty of caveats to that occuring.  Disregarding the foreclosure because of the short sale negotiations will lead to a default and then an uncontrolled nosedive into a foreclosure judgment - and borrowers need to be aware of that legal issue.
8:24am • #4
937,108 Points 361 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

No problem. I went back and edited to make it clearer that that was not me speaking. I'm way smarter than that :)

Have a great weekend.
8:45am • #5
980,970 Points 81 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Richard,

our experience was that when we tried to contact Lenders regarding shhort sale, they asked whether we had an offer. When not, they just told us to contact when we have one
6:27pm • #6
MAY
16
2010
975,688 Points 17 Featured Posts Hit Router Called Shot Master

Great information Richard.  While it's not logical, I've seen banks foreclose on homes while having significantly better short sale offers that were just not processed in a timely manner.
8:51am • #7
MAY
18
2010
367,965 Points 38 Featured Posts Outside Blog Hit Router Called Shot Master

Richard - Common sense would dictate the lender would postpone the foreclosure when they say they will, when they have a legitimate short sale offer.  Common sense does not always prevail.
7:17pm • #8
146,218 Points 38 Featured Posts Outside Blog Attended Rain Camp

Wendy -

Case in point in Palm Beach County.  Short sale offer completely submitted.  Here are two real examples - this happened twice to clients of mine.

In one case (the pending g short sale case) the foreclosure sale takes place even though the short sale negotiator for the bank put in an email that the sale was being cancelled and the borrower did not have to appear at the sale since it was cancelled.  Guess what - the sale occurs and now the bank won't look at the short sale and has it listed as an REO.

In the other case the short sale actually closed on Thursday and the bank got its money on Friday and called off the sale, but the attorney did not get the message and the sale occured and a third party was the winning bidder.  The bank is seeking to vacate the sale.

 
11:21pm • #9
JUL
30
2010

Question-- If notice of  final judgement of mortgage foreclosure is published and a property is scheduled for auction at courthouse, is the Selling Agent required to disclose that fact in a short sale contract/negotiation made 14 days after the notice?
Steve
12:30pm • #10
146,218 Points 38 Featured Posts Outside Blog Attended Rain Camp

Steve

I am not sure what state you are referring to, but if there is a pending foreclosure, I would think that this is material information that if known to the broker should be disclosed to the prospective or contract buyer.
10:57pm • #11
AUG
09
2010
Attended Rain Camp

I think I'm finally coming to the end of my education for the day. My brain hurts.
3:17am • #12
FEB
12
2011
608,296 Points 26 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Richard, your point of the attorney not knowing about the halt of the sale is so important. There are so many parties involved that it is impossible to guarantee any outcome until it is over.
12:26am • #13

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Richard Zaretsky, Florida Real Estate Attorney

West Palm Beach, FL

More about me…

Richard P. Zaretsky P.A. - Board Certified Real Estate Atty

Address: 1655 Palm Beach Lakes Blvd, Suite 900, West Palm Beach, Fl, 33401

Office Phone: (561) 689-6660 x 107

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Legal true life experiences, general observations and commentaries for Realtors, Lawyers and Mortgage Brokers - also see our Palm Beach County Short Sales group blog.
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