A HOME CAN BE SOLD AT A FORECLOSURE SALE IN THE MIDDLE OF A SHORT SALE NEGOTIATION
Over the past several weeks we witnessed several banks force the sale of several homes at foreclosure trustee sale auctions just days before the homes were supposed to close escrow in pending short sales.
It can be difficult or impossible to stop a foreclosure trustee sale once the date is set.
The Notice of Trustee Sale often blind-sides everyone, since everyone thought things were going so well.
In a recent flury, the lenders are clearing out so called “zombie homes” (homes waiting to be sold at a foreclosure sale) by accelerating foreclosure sales.
Early in 2009, we filed Temporary Restraining Orders (TRO’s) and asked the judges to order a stay of the trustee sales. We also filed lawsuits under NRS 598D, an unfair lending practices state statute, that purportedly automatically stays the trustee sale for 30 days. The judges grew tired of those last minute filings and frowned on them, to the point of dissuading some lawyers (including myself to some degree) from filing them.
Once the lender sets the trustee sale date, in the eyes of the lender, the benefits of a short sale diminish. So much so, that the lender will usually choose to sell at trustee sale, rather than attempt to complete the pending short sale.
One would opine that the best solution to prevent this occurrence is to ask the lender’s short sale representative for an indefinite foreclosure stay, at the early stages of the short sale negotiations. Unfortunately, the lender’s short sale representative may not agree (or lacks the authority to agree) to a foreclosure stay.
It is almost always, however, worth asking for a postponement of the sale date after it is set. But it usually doesn’t work. This problem is likely to get worse before it gets better.
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My home in Reno Nevada was acquired by Fannie Mae in a foreclosure auction in January and is now for sale for about 70,000 less then I owed on the property.
Two questions: How long does Fannie Mae have to sell the property? At what point will they have to decide whether to pursue me for a possible future deficency judgement or write off the debt and issue me a 1099?
Thanks,
Bob
Corvallis, Oregon.
I haven’t had any problems postponing trustee sale here in California. It’s all a matter of having a good offer and building a case that it is better for them to take this short sale than to foreclose.
I don’t see banks given indefinite foreclosure stay because they’d be giving up a nice pressure technique because they have buyer/seller/agents over the barrel every time trustee sale rolls around.