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Home > Foreclosure...no? yes? ...this is weird.

Foreclosure...no? yes? ...this is weird.

February 3rd, 2009 at 08:17 am

So for those of you following my first home purchase saga...here is an odd twist I am trying to wrap my head around.

Yesterday the mortgage underwiter sends me an email saying: "I have great news, I have been working with the Attorney and the
Seller to save the house from foreclosure and we were sucessful. They have given us an extra 30 days. I also have approved
your loan."

Since BB and I were not buying a foreclosure I immediately called my Realtor who confirmed he had not heard about any foreclosure and this was news to him.

I called my mortgage broker who told me the property was in foreclose and due to foreclose TODAY (1 day before they 'saved' it). He told me that his attorney discovered this and was working all last week with the bank to stop the foreclosure because the property is in the process of a sale. The seller actually owes "quite a bit more money on the property than my purchase price and I am getting a spectacular deal." He and the attorney saved me from having my purchase contract be voided out and having to start the purchase process all over again and negotiating to buy the property from the bank. The bank was happy to hear there is a buyer for the property and extended the broker 30 days to get the property to the new buyer (me). There is no way my Realtor or I would know it was in the foreclosure process because it was a pre-foreclosure or short sale and that information does not need to be disclosed to the buyer.

So I call my Realtor who told me he asked the seller if the property is in foreclosure. The seller explained a story about a foreclosure mix-up. "It had to do with miscommunication last year when he got behind on payments -- he actually had everything caught up, but the bank didn't have the payments in the right account -- it was just a matter of getting the payments in the right place. He said this underwriter had nothing to do with "saving" it from foreclosure. He's a little pissed off and we really need to close this deal by Friday."

So that's the story. Really I guess if the house was in foreclosure or not it does not effect me. But someone is lying here.

Either the mortgage broker is trying to look like a hero after all his delays and outright deception on getting this deal closed in a timely manner- or the seller of the property is lying because he does not want to look like a bad businessman or deceptive seller.

Both sides have their merits. How can a property owner be receiving foreclosure notices from a bank and not get that information fixed immediately? Wouldn't his credit score be tanking, wouldn't he be getting hit with all kinds of overdue/non payment late fees month after month?...Wouldnt he be motivated to make sure his monthly mortgage payments were actually paying his mortgage?

And if it was indeed a short sale and he owes more on the property than I am purchasing it for...wouldn't the seller have had to go to the bank to ask if he can accept my offer? Wouldn't I have found out immediately it was a short sale because the negotiations would have dragged out while the bank interfered with our negotiations. Instead the seller and I reached an agreed price on the same day I made an offer.

But if it was not a foreclosure then how is it that the attorney spent several days working with the bank to stop the foreclosure- unless they were flat out lying to me? How can a person successfully work with a bank to stop a foreclosure if the problem is that the money was placed "in the wrong account" for a few months. Wouldn't the bank admit it's actually not a foreclosure but a banking error that they have corrected? What would be the broker's motivation for inventing a foreclosure story? To make me grateful to him and forget about all the inconveniences and unfulfilled promises he made me? Can/do brokers actually just invent entire stories to save face or hold onto a client?

If it was a banking error and not a foreclosure did they waste a week of my time doing nothing with my mortgage and are covering it up with this foreclosure story...or did they really spend a week working on a problem that did not exist but they believed did exist? I don't know which option makes their business practices look worse.

And finally...do you think the attorney is going to charge me for this? I am guessing yes. But I don't want to pay for services I never asked to have done, was not told were performed until after they were finished, and may or may not have been needed.

Can anyone offer any suggestions here? I feel like someone is lying and I don't know who to trust.

16 Responses to “Foreclosure...no? yes? ...this is weird.”

  1. Caoineag Says:

    That is weird and I am betting the seller is lying. Short sales can't really be faked. Easy way to check up on this is to ask for the approval letter from the bank accepting the short sale on the amount of the short sale. Another issue, is that without this letter, you don't get the property no matter what anyone else says. You also need this letter to know when the drop dead date is. So your deal can easily fall through at this point.

    I know in our house buying, we didn't believe anything until we had that letter in hand and then we had to hustle. I made our mortgage company close 2 days early to avoid running into the drop dead date because any complication at that point will kill the deal.

  2. Ima saver Says:

    I wish I had some advice. All I can say is, what a mess! So sorry for all you are going thru!

  3. M E 2 Says:

    I agree, what a mess you're going thru. I also agree that (if I had to guess) the seller is lying. I am pretty sure any/all short sales must be approved by the bank.

  4. pretty cheap jewelry Says:

    ok, I smell trouble and the only uneducated advice I have is: KEEP DETAILED WRITTEN RECORDS

    make a file of the facts, dates, phone calls, etc. Keep it up to date promptly.

  5. whitestripe Says:

    oh god things just keep getting worse for you.Frown i have told DF, his sister and her fiancee your story (from when you posted the pictures of your lovely house) and none of us can believe the trouble you guys are going through. argh! i wish i could help you in some way.
    i agree with pcj, keep detailed records. is there ANY way you can sneak in around the banks, brokers etc and find out EXACTLY what happened? maybe if you wrote a list of all the things that contradict themselves, and call the mortgage broker, then call the sellers agent, and throw the facts back at them. say 'look, you told me this, but then i have facts for this and this. why are you telling me this?'. they won't expect it, and they'll stutter and then probably tell you the truth.

  6. NJDebbie Says:

    Wow, Gamecock you are a strong woman. I would've fallen apart by now. You've gone to hell an back. I hope that this gets resolved soon.

  7. NJDebbie Says:

    Wow, Gamecock you are a strong woman. I would've fallen apart by now. You've gone through hell an back. I hope that this gets resolved soon.

  8. shiela Says:

    Man, what a mess! So sorry that you are going through this. Hope it will be resolve soon.

  9. frugaltexan75 Says:

    My goodness! By the time this all gets resolved and you're in your house, you are going to be one exhausted couple!

  10. gamecock43 Says:

    Darn. I was hoping this was a common problem.

  11. scfr Says:

    My gut feeling about the situation? The seller is lying and the broker is embellishing. And I have to wonder how your agent has not been aware of this until now.

    It's not unheard of for a seller to list their house for sale and not tell their own agent that they are facing foreclosure. That happened with 2 of the homes I have looked at (that I know of ... there could be more). Why they do that is just beyond me, but I guess it's probably out of denial or embarrassment.

    If the home is in a county where such things are publicly recorded, I don't see why your realtor couldn't search public records and help you figure out what is going on with the house. (You could perhaps do a search yourself, but you'd need to know what to look for, which is why I suggest you talk to your own realtor.)

    Grill your realtor about laws where you are buying regarding short sales, foreclosures, etc. Specifically, if there are liens on the property (for unpaid property taxes, from contractors who did not get paid for work, etc.) how are you assured that you will not get stuck with those bills?

    I'm so sorry you did not know what you were getting in to in advance. When dealing with short sales or foreclosures, you have to be prepared for the buying process to take MUCH longer than usual.

  12. whitestripe Says:

    i mean... yes gamecock.. this is exactly what is happening to me...? Smile

  13. swimgirl Says:

    You poor thing! This is a nightmare. We've bought or sold houses and experienced 7 real estate transactions and all have been unbelievably smooth compared to this. I'm so sorry you have to deal with all this!!

  14. LuxLiving Says:

    It 'sounds' as if your attorney is doing his job - in my state they do a title search and make sure that seller has a clear title to the property and that no one else has an interest in the house. They call the resulting paperwork a 'Title Opinion' and it usually costs the buyer a couple of hundred dollars.

    I'd have my realtor get with the bank that holds the current mortgage to get the facts.

    I would proceed very cautiously!

  15. tiki Says:

    You're obviously going to get on top of this--you're seeing through this situation already. Seconding above advice to keep documentation.

    I think it's unusual for a realtor not to know about a short sale or foreclosure situation. We have a realtor who researches any property we're interested and immediately lets us know if it's a ss/foreclosure. Your realtor's ignorance, and/or willingness to accept that cock and bull story about the bank funds getting into the wrong account, is suspicious to me.

    And mortgage brokers are just a bunch of sleazebags from hell. Do you absolutely have to deal with one? You sound super smart and capable of doing all the research and footwork yourself. Eliminate the muddleman! (Pun intended)

    Anyway,this must be hard on you. You've fallen in love with the place and probably don't want to start over. Hope it works out, and don't give up :-)

  16. cylenchar Says:

    Take the property adress and go to that counties tax assessors page and see if you can find tax record on it. Or if you have the sellers name, search the county court house case dockets to see if foreclosure proceedings had been filed

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