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Old 09-26-2010, 11:54 PM
 
72 posts, read 177,217 times
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Default Closing is Close to Foreclosure date

We are looking now at a house that is NOT a short sale, but the owner is in financial trouble due to death of her husband that led to loss of their business, etc. The house has a detached building that is under roof, framed up and exterior done, all windows and doors done, but needs insulation and interior finish work, so we'd be doing an FHA 203k Streamlined to cover cost of getting that done.

We have a contract, and the closing is currently set for Nov 9. On Nov 12, if the house has not sold by then, the house goes into foreclosure as the owner simply can't keep up the payments.

If for some reason the closing did not happen before Nov 12 but we still have a contract and are looking to close, could her bank foreclose on the house and cause us to lose our contract? Or would the fact of our contract prevent a foreclosure?
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Old 09-27-2010, 07:52 AM
 
Location: South Metro Denver and looking at houses
8,386 posts, read 17,854,104 times
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I would make certain that closing happens on time and the title company gets the payoff to the lender prior to the foreclosure sale. That is the only guarantee you end up with the house and not the lender.
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Old 09-27-2010, 11:02 AM
 
Location: Tempe, Arizona
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2bindenver offers good advice. The bank is not a party to your contract and does not have to honor it. They can move forward with foreclosure.
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Old 09-27-2010, 11:45 AM
 
367 posts, read 807,497 times
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I would also make sure your realtor/attorney is speaking directly with the bank's attorney/asset manager to make sure they are aware of the situation.

If you have a bonafide offer that is going to net the bank/investors what they are OK with, they will typically postpone the sale.

I'd try to have them postpone it NOW... as opposed to waiting to see what happens with your closing on November 9th.

The lender DOES NOT want the house.... unless you are totally lowballing them or they feel they can get more if they take ownership.

I'm not sure where you are are located, but in Florida, all it takes is a simple motion.
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Old 09-28-2010, 11:39 AM
 
Location: Athens
470 posts, read 776,300 times
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Ok, maybe I read this wrong, but, what do you mean that the house goes into foreclosure. Is the owner current on payments (you stated "the owner simply can't keep up the payments")? Has the owner received notice of default (N.O.D.)? If a non-judicial foreclosure state, has notice been posted in the papers and a sale date set on the courthouse steps? Is Nov. 12 the start or the end of the foreclosure process?

If it is the end, the earlier comments are good but time will be of the essence, as make it happen ASAP!
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Old 09-28-2010, 12:27 PM
 
Location: The Middle
5,154 posts, read 7,069,692 times
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Does this matter though if there is a redemption period? I know MI has a 6 month redemption where the owner can still sell the property. Of course I have no idea about each state.
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Old 10-07-2010, 01:31 AM
 
72 posts, read 177,217 times
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[quote=keeshonder;16065451]Ok, maybe I read this wrong, but, what do you mean that the house goes into foreclosure. Is the owner current on payments (you stated "the owner simply can't keep up the payments")? Has the owner received notice of default (N.O.D.)? If a non-judicial foreclosure state, has notice been posted in the papers and a sale date set on the courthouse steps? Is Nov. 12 the start or the end of the foreclosure process?[quote]

Sorry not to respond sooner, just now getting back here (been busy w/ the situation!).

Haven't asked for details regarding the house payments and foreclosure situation, so I don't know if the owner has received a NOD, etc. But based on things the realtor has said, I do not believe that any notice has been posted in the papers as of yet and I think that Nov. 12 is the start of the foreclosure process.

Meanwhile, got 2 contractor estimates done last week. One estimate has been sent to us and it is not itemized. The other contractor didn't get his estimate worked up, talked with him this AM and he feels he is already too committed on other work to do this work in the timeframe allowed. So he asked permission to get another contractor friend to go and do an estimate. That may or may not happen tomorrow.

Our lender had said it would take 45 days to do the loan application processing. Was asked last week when that 45 day period starts? Finally responded today, said that it starts after she gets all the loan materials together and sends the application package out. So at this point, it would be mid-December at the earliest that we could close.

I'll add that after seeing our 3 months of recent bank statements, the lender asked for proof of several deposits that had been made. These were checks from my mother reimbursing me for groceries I had bought for her, and one was a gift of money. The lender required copies of these checks to prove where the money came from. I'm really glad I have not been selling anything for a while ... just imagining contacting a raft of customers and asking them to contact their banks to send me copies of their checks that I had deposited ....

Don't know at this point whether we will go forward. Realtor is contacting the owner's bank to try to get them to work with us on extension before foreclosing.
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