Short Sales, Lien Holders and Judgments, Oh My!

By
Real Estate Agent with Metropolist License #88953

Today I have a tale to tell ... a story of perseverance, patience and longevity.

I am writing to ask for help, advice and any creative suggestion...Cute House

I am working with buyers on a short sale transaction, to buy the cutest darn house.

We had mutual acceptance August 30, 2009. 

The good news is we received bank approval in February!  Quick compared to other short sales, I've learned.

Two lien holders ... both approved! 

But here's where it gets troublesome:

After the second lien holder approved $3,000 (and the sellers agent and I stepped up to give them more from our commission), they filed a judgment against the seller for the remaining $50K plus. 

Now escrow can't close because there is a lien.  I know this type of judgment is common after closing and so it seems easy to get the judgment removed and then the 2nd lien holder can file the judgment again after closing.

The person at the bank comes back with this:

"Hello, We will clear the title once the short sale is completed ! call the attorney that has the judgment that works for us they will confirm that ... We will not release anything until the short sale is complete !"

That's fine, just give us a letter correctly worded ... We called the attorney and they advised they cannot talk to us about it. 

We emailed back the lien holder and again:

"Hello, this is a judgment we have to release the lien if we are doing a short sale that means if we agree to this amount we do not pursue the customer for any debt that's why the judgment would be released we are not releasing anything until the short sale closes....if you need this confirmed call our attorney and that's just like saying they have no loan with us if we clear the title...we cannot until the short sale has been completed..."

The banks have systems where a telephone conversation is no longer possible.  If they were here, I'd walk in and talk face-to-face with them.  I will try every angle until it works.  I won't give up.  It was a long week and my creativity is shot on this one at the moment.  Does anyone have an idea, suggestion or any advice to help me with the final step in this process?

Thanks!

Posted by

_________________________________________________________________

Kate Pedersen

Broker / Realtor ®

206.841.5947

Realty Executives

View Houses For Sale

 



Comments (6)

Stephen Arnold
HomeSmart Elite Group - Scottsdale, AZ
CRS, GRI, SFR

Have title work up a document saying that they will be unable to close escrow on the property unless this judgment is cleared up.  THEN have the listing agent escalate the file to a VP or equivalent and raise hell! You might make some progress with everything in writing!!

Mar 13, 2010 07:49 AM
Kate Pedersen
Metropolist - Seattle, WA
because life moves you

Thanks, Stephen.  Yep, title has written the letter, but the escalation process has yet to be started.  I appreciate your thoughts!

Mar 13, 2010 08:17 AM
Anonymous
concerned friend

No one wants to take a loss, especially when they think the market will turn for the better. Ive heard of sales being held up for that reason, which makes business sense. Here is a link to blog about short sales being sabbotaged either on purpose or by incompetence.

 

http://agentgenius.com/g-rants-insanity-more/realtors/bank-of-america-retard-division-for-short-sales/

Mar 16, 2010 06:11 AM
#3
Kary L. Krismer
John L. Scott/KMS Renton - Renton, WA

I think all they need to do is deliver a release that pertains to that property only, to the escrow agent, with instructions to record it only if that sale closes.  If they have a judgment, arguably they don't have a mortgage lien anymore (I'd have to think about that one). 

Apr 09, 2010 02:26 AM
Kate Pedersen
Metropolist - Seattle, WA
because life moves you

Thanks for your suggestions.  It was escalated ... and we finally received a response.  The bank agreed to advise they will remove the lien once the sale is closed.  I've learned since then, in Washington the 2nd lien holder can file a deficiency judgment for up to 26 years afterwards anyway though.  Can't blame them ...

Apr 09, 2010 12:30 PM
Kate Pedersen
Metropolist - Seattle, WA
because life moves you

Good News Update:  This short sale closed last week! 

Apr 27, 2010 07:48 AM