important short-sale question…please help - Posted by JR
Posted by JR on May 18, 2006 at 17:19:11:
Ok, here’s the background information. A family member lost their job and couldn’t make their house payments. After 60 days their lender, which I believe was a private lender who had the loan serviced through Litton Loan Services, sent them a NOD and started the foreclosure process. This was in January and I told my family member I’d try to negotiate a short-sale (different last names). Well, after executing the proper legal paperwork and contacting the lender I got the short-sale package. My family member deeded me the property, which I put into a land trust, then I put together the short-sale package including the comparable sales, hardship letter, bank statement showing a negative balance, offer to purchase and a repair estimate from a contractor (hail damage). I faxed all the information as directed by the lender’s short-sale package and called to confirm they’d received it, which the receptionist said they did. The completed package was submitted in mid-March due to a few hang-ups that cost us time.
Fast forward to yesterday. After waiting to be contacted by the lender as they directed, my family member got a letter notifying them of a sheriff’s sale for June 21, 2006, which was from Chase Financial (not her lender) who apparently bought out the note. This happened after I did not get a reply from the lender even though I did make several attempts over the last two months trying to get ahold of the rep who was handling the account, but they have a receptionist who screens all the calls and sent me straight to this lady’s voicemail. She did not answer her phone, or return the call even once (she faxed me the short-sale package because I left my fax number on her voicemail). I even tried to get a direct extension to her office, but they wouldn’t give me a direct line either. Needless to say, I feel horrible about the situation because I really wanted to help out my family member and now they have this horrible situation that was dropped on them out of the blue and we received no warning from the lender, not even a rejection of the offer.
My question is this, is it customary practice to sell off the note to another lender/company without warning the borrower, or even formally rejecting an offer sent in by another individual who’s working on a short sale? If so, why does this happen and do I have any recourse? Is there any possible way that I can still buy the property from Chase in order to save their credit from a foreclosure/BK? If so, how and what do I do?
Just for the record, they owed $79k on the home, Chase wants to collect $82k at the auction, but I know there’s no way they will get that much. I looked at comps and while there are a few homes in the neighborhood listed for $70-79k, they are exceptionally nice and need no work, but none of them actually sell for that much. The average sold-price is something like $54k and this house needs AT LEAST $15k in work from the hail damage, but needed other repairs before that. Also, the average sold-price for foreclosures in the neighborhood are actually about $35-40k based on comps. Thanks for any feedback!