By: Ilyce Glink and Samuel Tamkin
Q: We have been trying to buy a short sale for over a year and due to so many errors by Freddie Mac and the bank that held the mortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home. it has now become a foreclosureForeclosure is the legal action taken to extinguish a home owner's right and interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds. in a property, so that the property can be sold in a foreclosure sale to satisfy a debt.. As you probably know, the rules constantly change.
The kicker to this is I have sold my old home. The bank allowed us to move into the property we want to buy under a lease agreement since they said that closing would be a matter of dotting some “I’s” and crossing some “T’s.”
Freddie now says we have to move out since their rules say the home cannot be sold while it is occupied. Even though we had a verbal approval on our offer. I am reaching out to you to see if you could pointA Point is one percent of a loan amount. me in some sort of direction to help resolve this. I have contacted my congressman and state rep but they have just blown me off. I have great credit and have been preapproved for the purchase.
And I will gladly accept the home as is without our government having to spend one more dime of your money or mine. Seems so simple. Can you help point me in a direction.
A: For a short sale to work, you need a willing seller and owner of the home. If in your case, the owner of the home has disappeared, and it appears the lenderA Lender is a person, company, corporation, or entity that lends money for the purchase of real estate. can’t work with you to sell the home. The lender doesn’t have titleTitle refers to the ownershipOwnership is the absolute right to use, enjoy, and dispose of property. You own it! of a particular piece of property. to the home and can only get title to the home if the owner transfers the title to the lender or the lender forecloses.
If you and the seller have been working together to try to get the short sale through, then we are at a loss as to why the lender would allow you to move in when they don’t own the property. The owner would be the one responsible for renting it to you. If the lease is between you and the lender, you might have a beef with the lender. But if your lease is with the owner and the owner has disappeared or failed to cooperate with the lender, you may be in trouble.
However, if the owner is cooperating with the lender and has submitted all the documents for the short sale to occur, you need to investigate further who has submitted the documents to the lender and whether a final approval for the short sale was obtained. If you have all of that information and now the lender has decided to ignore the owner’s request for the short sale, you have to evaluate your options.
You should probably file a complaint with www.helpwithmybank.gov and FHFA, which regulates Fannie Mae and Freddie Mac. A complaint with the Consumer Financial Protection Bureau (CFPB) might help, too.
And while you might not want to, you might need to join in the foreclosure suit. Depending on the information you have by email or correspondence, you might have a case against the lender. The real question is why the lender has decided to ignore your offer to purchase the home under a short sale. Another important issue is whether the home was actually foreclosed or whether the suit of foreclosure is still ongoing. Depending on how much time and money you’d want to spend, you might want to get an attorney involved.
Keep in mind that hiring an attorney could be expensive and you don’t want an attorney learn the ropes of how to fight the foreclosure and lender on your dime. You want an attorney with significant experience with foreclosures and these types of lender issues.
It’s possible that you might be out of luck on this one and may have to just find another house rather than fight the lender. While you may think that Fannie Mae may be at fault, it could be the lender as well. During the entirety of the housing crisis, it seemed that the short sale negotiators were working with the owners to sell their homes to buyers while at the same time working the legal process to foreclose on those same homeowners.
With that in mind, the government has promoted various programs to give lenders incentives to avoid foreclosure and get home into the hands of buyers. It’s unfortunate that your representatives in Washington are unwilling to help you if you have a legitimate right. However, you need to get more information about where you stand in the process.
Please email us and tell us what you find out and what happens.