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Wow, so I have a client that had entered negotiations with BOA in order to list the home as a short sale. The foreclosure proceedings had also begun, but they eluded they would prefer the delay of that and consider a short sale instead. So just as the ball was getting rolling and she was contacting them to send the formal paperwork they had requested, they said, the loan was being sold to PenneyMac and she would now have to talk to them, but it would be earlier December.
This is a bit frustrating. Our office has a great potential buyer, but we don't want to promote it of course without some commitment on the listing/bank end. This is a small one bed home, in a small rural area. Even finding a buyer regardless of realistic pricing can take over a year on a one-bed home in our area.
Seems crazy that a home can be sold as it is entering foreclosure not to mention with the request for a short sale about to me submitted.
Mortgage peeps, does this appear legal? Does it happen frequently? Is there any option? The clock is ticking for my client and within just a couple more weeks (had BOA kept the note) my client would have been SOL except for the fact they had said they would extend. By the time the note transfers it looks like there will only be a few days before the right of redemption will end.
It certainly is legal. Does it happen frequently? No. But BofA has been selling off large portfolios of loans recently. Not just non-performing loans, but packages of loans that include both performing and non-performing loans (I know my loan was sold).
I do not know what this does to your timelines you may have to wait and see. The only other option, is legal assistance, which may be able to help, but cannot say for sure. Sometimes and attorney can "stop the presses".
I do not think there is much you can do about it except to explain the situation to the buyer and hope they don't bail.
Crazy, Thanks Joe. I'm betting the buyer will come up with a suitable 2 bed in the meantime. A touch more money but....
I mentioned the attorney advise as well to my potential seller, unfortunately she doesn't feel that will be in the cards.
More of a cross your fingers and wait.
Definitely legal......and depending upon the agreement, once PenneyMac realizes there was a loan default (how they will view it), BofA may be required to buy it back. It depends on the agreement. Prepare yourself and your client for this possibility......just another reason why short sales are unpredictable and so far below market.
All lenders are concerned about attracting new investors, clearing their books of bad loans makes them look better. I see this every day with big lender's like BOA, they can elect to assign a sub-subsidiary to service the loan while the loan is in default, or out right sell off to another servicer.
When a servicer changes and a loan modification or short sale is being worked on. The homeowner is required to submit new paperwork. Depending on the state - whether judicial or non judicial, will determine how fast the bank can move to foreclosing on the property.
Just doing a short sale - 'Will Not" stop a foreclosure.
Every situation is different due to the loan terms, the lender, the borrower, the value vs amount owed, location, etc.. If someone could predict what and when something is going to happen concerning foreclosures, they would be one of the wealthiest people in America.
In non-judicial states - the loan servicer "does not" have to go through the court system to foreclose. It is advisable to work with the servicer on a deed in lieu. This allows the property to be listed for three+ months as a short sale. Then another three months working on a loan modification. On average I am seeing homes in non judicial states taking 7 to 8 months to be foreclosed upon.
In judicial states - services have to go through the court process in order to foreclose. It takes much longer (New York for example up to five years). Just doing a short sale is safer because of the legal time constraints.
In most cases when you are activity working a short sale, doing all the work. Your doing the bank a favor (especially BOA - they are really backed up). This can allow more time before they start foreclosure proceedings. Once a sale date is set - unless there is a full package in the hands of the loan servicer 10 days before sell date, the only recourse is filling bankruptcy.
My $00.02 ..
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