Thanks for your reply and explanation Justin618. I realize the deal is broken but my explanation, hopefully, may prove informative and instructive to others.
...the homeowner ratified the contract and submitted it to his lender for approval. Six weeks after submitting the contract the bank foreclosed on the house without ever replying to the contract.
In the standard FNMA/FDMC mortgage the lender may consider the loan in default after 30 days of not receiving a scheduled payment. However, this rarely happens and the lender tries collecting the past due amounts to bring the mortgage current. This procedure goes on four to six months at which time the defaulted loan is transferred to a foreclosure attorney in the state in which the property is located. The homeowner receives written notice that a foreclosure is imminent.
Lenders are now swamped, buried in failed loans. They are not returning calls; in fact, once a law firm has the file, the homeowner has to contact the foreclosure firm. The lenders have "no comment" once a lawsuit is initiated.
First, a lis pendens is filed notifying the homeowner that a lawsuit is pending. The lawfirm sends the homeowner written notification and a statement of what is owed and the costs to reinstate the mortgage. The law firm then seeks a foreclosure judgment. Another two months may pass. If the lawsuit is not contested and a foreclosure judgment granted by the court, the homeowner is notified of the foreclosure sale and has the opportunity to bid to protect his home.
In the situation described, the homeowner obviously did not fully disclose the sequence of communications he would have had from the lender and from the foreclosure law firm. Secondly, repeated endeavors to contact the lender to have a contract approved fell on deaf ears because the lender had turned the case over to the lawfirm.
The homeowner and your brother should have found the status of the title from a title company or from a real estate attorney who could search the records to determine if and when the lis pendens was filed and if there was indeed a foreclosure suit. Or they could go to the county courthouse and check the records themselves. The lender's staff would have no clue on the status of the lawsuits.
Attorney's regard offers for a short sale as a delaying measure. The homeowner's resort if he fails to have the assets to pay the mortgage off or bring it current is to either get the backing of a hard money (15%) lender or walk.
Lenders are selling bundles of foreclosed loans to hedge funds and other investors at thirty cents on the dollar. They clean house not one mortgage at a time but in groups of 250 to 500 homes.
The explanation of a mortgage is ... if you pay you stay, if you don't you won't.
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