I suppose this article could also be entitled, “How NOT to Stop a Foreclosure.” I received a call recently from an agent who took a short sale listing on a home that was dangerously close to foreclosure. That is, the borrowers had missed upwards of eight payments, and the lender had already filed all of the necessary paperwork in order to proceed to foreclosure auction (bye, bye property on the courthouse steps) in just a few weeks.
I alerted this agent that she would have to be quick and efficient in taking her listing and obtaining a buyer for the property. And, even then, there would be absolutely no guarantee that the seller’s mortgage lenders would want to entertain a short sale so late in the game. But, we could certainly give it the old college try.
So, the agent called back a few days later and sent over her listing agreement and some of the relevant paperwork for the short sale package. And then suddenly, it sunk in. There was no guarantee that the bank would postpone the foreclosure auction date—just because she had taken the listing.
She had been misinformed. Somewhere down the grapevine, this agent had heard or understood that when you take a short sale listing and put it on the MLS, the bank will cease all foreclosure activity.
This is false. As long as the mortgage lender is proceeding according to law, the lender can foreclose at any time. The lender does not have to halt a foreclosure because they have a pile of paperwork.
Short sale is a form of debt settlement. It is entirely up to the lender whether they want to settle the debt or not.
And, while we are on the subject, there seems to be a huge trend in homeowners waiting until the very last minute in order to hire an agent to help them sell their home in a short sale. The best time to list a home as a short sale is NOT after the auction date has been scheduled and definitely not when the sheriff has pulled up in front of the house.
Spread the word: an agent experienced with distressed properties can help a borrower successfully close a short sale, but needs to be given more than a two-day window in order to do so. Give me a break. Rome was not built in a day.
Comments(9)