Avoid A Last Minute Short Sale

The Detroit Free Press touched on a subject recently that seems to be somewhat of a growing problem – banks taking possession of homes before they’re allowed to, or at least, supposed to.

It’s one of the best reasons not to wait to attempt a short sale.

Yes, you typically have 120 days from the date of your last mortgage payment until the sheriff’s sale (and another 6 months or more through the redemption period), but if a lender or servicer deems your home to be vacant or abandoned, they often have the right to “winterize” the home to protect their investment.

Usually, that means shutting off the water and changing the locks. This is where many of the issues cited in the article begin.

If you start working with your lender early, these problems are typically avoidable. The longer you wait, you’re not only gambling that you’ll be able to provide the bank with what they’re seeking (payment, short sale, etc.), but you’re gambling that they will be able to communicate the resolution to the necessary parties in a timely manner. This is far from a safe bet.

A client of ours had initiated a short sale, just prior to the sheriff’s sale date. We continued to work with his lender after the sale, but the lender never informed their local attorney’s. Our client had already moved out of the area and wasn’t receiving his forwarded mail – including letters from the lenders attorneys. When he didn’t respond to the letters, the attorneys decided they would shorten the redemption period and get the home re-listed. When we found out, we fought it and Chase had them reinstate the full redemption period.

Once a step like that is usually taken, it’s rarely reversed.

I understand that many people wait until the last minute so they continue to live rent free for as long as possible. If that’s your intention, I can’t say I blame you. But, be aware that’s it tough to have it both ways. If you want to wait, it’s a gamble. If you’re like me and Vegas ain’t your speed, start working with your lender early and increase your chances of a positive resolution. Living rent free for a couple months is nice, but I’d rather be excused from a six-digit deficiency…