Can banks interfere with your Short Sale listings? Apparently, they can.

By
Real Estate Agent with RMX REALTY

Can banks interfere with your Short Sale listings? Apparently, they can.

I never imagined this would happen but it did. I had a good offer on one of my listings and everything was going as planned. The negotiator sent over the approval letter and we were on track to close escrow. All of a sudden, the seller contacted me to say that they want to put everything on hold. The reason? The bank had sent the seller a letter indicating that they may qualify for a loan modification. This is after the fact that the seller's request for a loan mod had already been denied not once but TWICE. The seller is unemployed and has been so for over the past year.

Since the seller choose to see if they can qualify for the loan mod, the bank states that the seller has the right to cancel the short sale although we were in escrow and plan on closing shortly. The bank would revert the short sale transaction and starts the loan mod process with the seller. Wouldn't this be considered interference on behalf of the bank? The odd thing was that the negotiator is not even aware of this situation but informed me that if the seller choose to go with the loan mod they have the right. I can understand that if the seller has a job. If that is the case, I would definitely suggest the seller to attempt the loan mod process. However, without any job and being unemployed, I don't see how the bank is able to help the seller. This may only drag out the process and the house may go into foreclosure since the buyer has now decided to walk due to this unexpected situation.

There has to be some guidelines so that conditions similar to this will not occur in the future. But then again, banks work in mysterious ways. For banks to be able to do this, it will jeopardize many future short sales out there on the market. This will not only waste time for buyers and agents but ultimately put the seller through foreclosure.

 

*********************************************************************************************

For FORECLOSURE Prevention & all your Real Estate Services,

Contact: 

 

DAVID DEE
(626) 203-5676
 

"Client 1st. That's the David Dee Guarantee."

Specializing in: (SAN GABRIEL VALLEY) San Gabriel, Rosemead, Alhambra, Monterey Park, Arcadia, Temple City, El Monte, Hacienda Heights, Rowland Heights, Walnut, West Covina and

(N. ORANGE COUNTY) Anaheim, Buena Park, Westminster, Garden Grove, Fountain Valley and other surrounding areas.                                                                  

Copyright © 2010 by DAVID DEE. All Rights Reserved. "Can banks interfere with your Short Sale listings? Apparently, they can."  

Posted by

Ā 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate General Information
Location:
California Los Angeles County Alhambra
Groups:
RealtorsĀ®
Century 21 Network
Dedicated Bloggers
EXPRESS WITH WORDS AT ACTIVERAIN
Diary of a Realtor
Tags:
banks
short sales
loan modifications

Spam prevention
Show All Comments
Ambassador
2,089,409
Michelle Cherie CarrCrowe Just Call...408-252-8900
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

And I wouldn't be surprised to find out the letter he received is just a standard offer and he's denied all over again.

Nov 10, 2010 07:14 PM #1
Rainmaker
407,818
Cameron Novak
The Homefinding Center - Corona, CA
Featured Corona Real Estate Agent Team

This sounds like a case of tortious interference.  These big banks try to pull it all the time.  If the approval letter was legitimate, the seller is obligated to perform.

My favorite is when they attempt to modify my commission even though they are not a party to the listing agreement between my brokerage and the seller.  They'll even go as far as refusing to allow ANOTHER PARTY TO THE TRANSACTION to pay the commission deficit.

It all happens because there are uneducated, spineless agents all over the country that allow it to happen... and the banks know they can bully everyone involved.

Nov 10, 2010 08:59 PM #2
Rainmaker
1,142,260
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

David I don't believb they can force the seller to cancel and go to a loan mod. However, if they offer the loan mod the seller can certainly choose to go this route. I'm assuming this is covered in the short sale addenda to the listing agreement and the purchase contrcat. But it stills sucks.

Nov 11, 2010 01:53 AM #3
Rainmaker
126,381
David Dee
RMX REALTY - Alhambra, CA
Real Estate - San Gabriel Valley (L.A.) & N. Orang

Michelle, so true and that may very well happen. Sometimes, I wonder if these banks even got their head straight.

Cameron, the bank's response was that the seller is not obligated to perform and proceed with the shortsale as they have the right to switch over to the loan mod. Is that impossibly ridiculous or what? I just can't comprehend their reasoning when the seller has no job and denied loan mod twice already.

BB, the bank did not force the seller to cancel but gave them the option to check into a loan mod a 3rd time. You're right about that.. as it sure sucks on how these banks behave.

Nov 12, 2010 06:05 PM #4
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
126,381

David Dee

Real Estate - San Gabriel Valley (L.A.) & N. Orang
Ask me a question
*
*
*
*
Spam prevention

Additional Information