I have a home listed for short sale in Fort Walton Beach, Florida. The property was a primary residence, and the seller lost his job and relocated to another state to find work. He is also in the midst of divorce proceedings. During the listing period the seller was advised by his attorney to file for bankruptcy. Subsequently, we received an offer for the property. During the time period, the seller was unclear about the status of his property.
I called Citi, the short sale lender, to find out if they would entertain a contract even though the seller was going to file for bankruptcy. Citi said, "Yes", we could proceed, and he could still sell his property. Citi assigned the file to a negotiator, ordered the BPO, and requested further documents from my seller.
A few weeks later, Citi abruptly emailed me and said they could not take further action, as the house was now part of the bankruptcy proceeding. I found it odd that initially Citi said to "go forward" with the short sale, then several weeks later mysteriously said they could not help. I made numerous phone calls through the Citi phone loop, and finally got a department who told me that they needed an "order by the bankruptcy court" stating they could proceed. So, I called my seller who called his attorney. The attorney provided the contact information for the court-appointed Bankruptcy Trustee.
I called the trustee, who was a magnificent help. He said that since the property had no equity, the court did not want it- there was nothing to divvy up amongst the creditors. He said that after the bankruptcy the property would go back to my seller, anyway, and he would be happy to help me and release it now. So he is sending me paperwork to proceed with "Abandonment"of the property from the bankruptcy court. If there is no objection to the abandonment within 15 days, the property will be free to short sell. Otherwise when case closes it will be deemed abandoned by law, anyway, and go back to my seller. The trustee also mentioned that Citi could have asked for "abandonment" to continue foreclosure, and had started to do so, but had "dropped the ball". Perhaps that is why Citi initially started the short sale, then stopped in the middle.
The happy ending is that the young lady who has been waiting to purchase her new home will likely be rewarded for her patience, and my seller will have prevented a foreclosure.
It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Fort Walton Beach FL Real Estate
Fort Walton Beach Short Sales & Pre Foreclosure Help.
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Don't you just love a good ending.
I'm not surprised that someone at Citi would make such a mistake. Let's face it. The banks don't even know how to sell real estate. How are they to know about the bankruptcy matter?
The trustee will simply prepare an order for the judge to sign and you'll be on your way, baring any more problems with Citi.
Wendy, the tales of the left hand not knowing what the right hand is doing occurs with such frequency it's alarming. Let this be a lesson to all buyers, sellers ,and bankers. Realtors do their best to keep the wheels on a transaction when hope appears to be lost. If anyone out there thinks we serve little purpose read more case studies just like this and our value will be abundantly apparent. Nice Job Keeping this together Wendy.
Wendy - You did a fabulous job for your seller in preventing the foreclosure of their property by going through all the hoops necessary that will now allow you to do a short sale. Congratulations on a job well done!
Wendy, good job of dealing with the machine, and saving your client's bacon! The banks sure can gum oup the works, and act as if they couldn't care less about the devastation their former customers have to deal with.
I am surprised that you were given that initial innacurate info, the second part is always the route I have seen bk/short sales go.
All because you are a great agent who takes the time to find the problem, the solution and the people who can make the problem go away. Too many other agents are too lazy to put in the effort to make deals like this work. Congrats and keep up the hard work.
Great job Wendy- You should feel good at night when you put your head down on the pillow. Falling asleep knowing you did the "right thing" and the best you could , You hard work paid off.
Patricia Aulson/Portsmouth NH Real Estate
Lenn - The trustee thinks Citi might mess things up again!
Steve - Thank you, it feels good to keep it "alive".
Donna- Thank you!
Michael - I appreciate it, thanks.
Heather - I questioned and re-questioned Citi from the beginning before going forward.
Kelly - That's my motto- "Problem - SOLUTION""
Patricia - Thanks a bunch.
I've just went through a similar response from a bank on my short sale. They aren't even responding to the release from the bankruptcy. Unfortunately the buyers decided to leave before we could get an answer back from the 2nd lien holder. I'm finding harder to get these through a 2nd when you have a different bank holding the note. Does it depend on the bank, or is it because they are receiving very little compensation?
Ryan - I think the response depends on the bank.
Hi Wendy, Your buyer is lucky to have your persistence and talent !
Wendy, this is a great example of why buyers who want to take advantage of these great deals in the market today - often short sales or foredclosures - need to have an agent on their side. You know what to do and what calls to make. A buyer on his own or with an ill-equipped agent would be still looking for a house today.
Sandy
Bill - Thank you :)
Sandy - You're right, the buyer would have lost her home, the seller wasn't even told he would get the property back!
Wendy, what a great job pursuing a better option for all parties involved. Many of us would just give in to the frustration of dealing with the uncooperative bank!
Thank you for reminding us that we need to persevere and not just accept the first -- or second or third -- answer, because somewhere higher up there may be the right person who has the authority to DO THE RIGHT THING.
What a great story. It just proves that one should pursue all avenues in the quest for resolution.
Interesting read. It is good to hear the happy endings.
Marney - That's right, perseverance is "key" with short sales.
Thank you, Vickie!
Tere - Thank you.
I'm surpised that you haven't run across that many times in this market. That is just about the first thing an attorney would do and they say it was for their protection. Hopefully the attorney didn't have it removed because they the seller could (not likely) become responisble for the taxes and difference if the lender wanted to do it.
Charles - The trustee said the seller's attorney may have just wanted to be "done" after he got paid, unfortunately. The seller frankly believed he would no longer own the property.
Wendy,
I've heard a similar story....not sure of the outcome but very similar with the seller filing bankruptcy and wasn't able to sell it short.
Get a buyer for that house and the judge will order it sold. The only thing Citi could do is file a motion to lift the automatic stay so they could foreclose.
Good luck.
Wow Wendy -- a great job on wending your way through the very confusing maze the real estate business is currently in.
Sue
Wendy...
What a great post this is. Problems like your Seller had rarely have a happy ending.
TLW...ROAR!
Wendy, your clients are lucky to have you as their agent. Someone else without the tenacity and perseverance would have dropped out of this deal long ago. Nice that you were able to prevent the forclosure and sell short, and nice that this has a happy ending.
Wendy is sure does pay to be persistant. Most agents probably would have given up.
Good for you for follwoing up with the attorney.
Wendy - Thanks for the education. I know that once a seller files bankruptcy, it can derail a short sale. It has to be specifically excluded in order to proceed. I suspect we will all start spending a little but more time at the courthouses across the country, but our sellers - and buyers - will appreciate it. And I suspect we will all have a better understanding of how this whole process works, too.
Wendy- congratulations on a job well done and also on an educational post for the all the agents here on ActiveRain.
Neal - It would seem that most sellers should be able to sell it short, because the court doesn't want a negative-equity property.
Lenn - At least if Citi filed a motion, we'd be in the same boat as getting a short sale to stop it.
Robin and Sue - I "Wend" a long way:)
TLW - Thanks for the happy GRRROWLL :)
Leah - Tenacity is the name of the game.
Bill - I "never" give up:)
Sally - This is one I will refer back to many times in the future, I am sure.
Christianne - I believe you are correct.
Kim - I am grateful the post may help others in the same situation with a short sale seller thinking about, or in the middle of, bankruptcy.
Wendy - Persistance is key ! Great job staying with it and not giving up on the deal ! That is the best part of your story I think as most agents might have got too frustrated and would not have been able to do the follow-up and due diligence that you did. Cognrats !
Thanks Wendy,
I came across the same situation and the seller's Attorney told him he had to take the property off of the market when he decided to go the BK route... the same day a good offer came in on the property.
Hmmm....
Christopher and Stephanie - Thank you, I almost take it as second-nature I guess, not to ever give up. It comes in handy.
Paul - That is really "weird". Hmmm is right...! Question everything!
Good for you, Wendy!
Your Buyer is fortunate to have someone like you on her side. Many other agents would likely have given up, and often do not know the best way to muddle thru it.
Sounds like you & your Buyer will be doing the "happy dance" before too long!
Big Time CONGRATS - you have certainly earned your commission.....and there's no telling how many referrals you will get from your satisfied client!
Edith Schreiber - Dallas, Texas
Thanks for the lesson on short sales and bankruptcy, it may come in handy. It's not a surprise that Citi's departments don't all have the same information and policies/procedures. This is a problem with all huge companies.
I hope, that throughout this ordeal, no one has interfered with your and your client's listing contracting, specifically, your commissions on the sale! I actually think bankruptcy is a great alternative -- can we say Chapter 13 boys and girls! Look, if the banks are not dealing correctly with the short sales, and forcing foreclosure, the Bankruptcy will put it in limbo, and even force the short sale through. The sellers' credit is going to be ruined one way, or the other, might as well have a short sale and get a buyer in their sooner -- rather then (foreclosure) later.
It sounds like the CITI person was a loss mitigator. They have a high turnover rate and he/she could be new. I'm glad you took the extra effort to help two groups in need.
Wendy -
Thanks for this insight! I thought a BK would permanently halt the short sale process, but, apparently, it only delays it.
However, buyer must have patience to wait out the process.
Appreciate the share!
DEAN & DEAN'S TEAM CHICAGO
This sounds like the happiest ending have heard in a long time about a foreclosure or short sale. Congratulations.
Thats another reason why short sales are challenging because so many things can come up but sounds like you did a great job handling it.
Great Ending but it sounds like it took a lot of work to get there!
nothing shocks me anymore but most banks know a BK stalls the Foreclosure. The banks really need to hire some help to give them advice on this stuff. If the Seller files for bankruptcy protection then the bank at least should know they better not seek a deficancy.
Wendy, this is a great story. We saved a house from the courthouse steps last summer when bank #1 couldn't give a loan to some perfectly great creditworthy people and we scrambled to find a bank that would. Persistence pays off!
Sharon
I am currently smack in the middle of a short sale. I represent both sellers and buyers. It is with Countrywide. I have been working on this deal since December 17, 2008. It is a mess, Countrywide is a mess. I finally am told I'm in the 2nd stage of the process. I, too, really stayed with this deal and was constantly calling, every Monday, since December...that's a lot of operators I spoke to. They did tell me that it was my persistence that finally got me to the second stage...My seller and buyers are really staying with me, I have kept them in the loop. The buyers are getting the sale of the century and my sellers (divorced) are just glad to be out. I am hopeful we will have a resolution sometime in May. The worst part is, Countrywide may not even agree to this short sale. MY seller make a great living, just divorced and a house that just wouldn't sell. So, I'm keeping my fingers crossed. Incredible isn't it? Looks like I'll make about 2 cents/hour when all is said and done!! I could teach a CEU in Short Sale !! God help me, I don't want to and I don't want another one. Thanks for all the input. It was very helpful.
bankruptcy does put a whole different spin on everything. the judge now has to approve it
Wendy,
Sorry, my blog does not show my affiliation. Not sure why. I'm in Northeast Ohio with Howard Hanna.
This is why you must, MUST disclose to all parties that in a short sale, it may take longer than expected, there may be changes in price and terms, and that there may be (will be) last minute changes. We never know what to expect, but if buyers are properly disclosed early, the bumps in the road become easier to bear and the buyers may stick around longer.
www.short_sale_expert.activerain.com
Wendy...thanks for the info...we all benefit from it!
Great to hear there is light at the end of the tunnel. I am in the middle of a short-sale now and after the bank said it was a go- approved and everything now the closing is taking more than 2 months!! Go figure...patience is GOLDEN on short-sales.
Wendy- Congratulations on a well-deserved feature. More importantly, congratulations on once again displaying why you should be the agent of choice for Destin buyers and sellers. Your relentless efforts on your client's behalf gives him the opportunity at the best possible outcome.
Hi Wendy -- Tenacity pays off -- for everyone.
Wendy- We have done 3 short sales with bankruptcies just like this and you are doing it all right and you are blessed to have a nice Trustee. We had a very unhelpful one. We had a title company who refused to do the title so we had to fire them in the middle of the transaction and get a title company that would write on the file. We have been with this great title company ever since:) Good luck. Let us know how it turns out.
As you found out, once the seller files bankruptcy, the trustee calls all the shots re: the disposition of any assets. The folks at Citi may have made a mistake , but its also possible that they were trying to help you (and themselves) out by trying to get the sale done ahead of the filing. As you say in the second paragraph of your post "I called Citi, the short sale lender, to find out if they would entertain a contract even though the seller was going to file for bankruptcy." This implys to me that he had not yet filed. The problem here was that the seller filed before Citi finished their work. Kudos to you for sticking with it and getting the job done anyway.
It's my understanding that if there is little or no equity in the home, the trustee should not have a problem releasing the home from the bankruptcy proceedings. glad to hear there is light at the end of your tunnel Wendy. Good job.
I'm still hoping for some govening legislation, or direction from banking industry that has some sort of standardized process for the national real estate nightmare known as short sales.
Wendy,
You worked so hard, but I believe we learn something new on every deal we do especially if it is a short sale or an REO. Thank you for sharing.
Wendy,
This was really, really useful. Thank you so much for sharing. I've been surprised by how little information is shared with the consumer about what their options are in a bankruptcy. I for one will be spreading the word!!
Thank you very much and congratulations on showing tenacity to resolve the situation in a manner that was best for all parties involved.
Hi Wendy,
I just went thru something very similar with Countrywide. We were off and on 2x with the bank saying they were 'closing the file' because the seller wouldn't provide updated financial hardship papers - which was because his bankruptcy was granted in Nov '08. Sellers atty said don't give the bank anything & don't sign anything further. Ugh! Buyers backed out AND THEN Countrywide sent an acceptance for the short sale. Glad to hear it worked out for you!!!
Wendy,
I'm glad this worked out. It's easy to see how a less determined realtor may have given up on getting this deal done.
Hi Wendy We went through a similiar situation with Countrywide a few months back. The property had to be taken out of the bankruptcy action and it took close to six months from start to finish. We did not want to pull it out of the bankruptcy until we had an offer but it finally closed! Getting a sale for the neighborhood instead of a foreclosure and helping the seller as well. From one Florida Realtor to another.... Short Sales seem to be the name of the game here! Patience is a key word for short sale buyers. It can be worth waiting. Good Job!
A whole lot of work - hope you get your full commission!
Too bad you didn't post your problem when this happened. When you know of a bankruptcy filing that is either taking place or going to take place you have to get the TTEE to give you the document to remove the house from the bankruptcy so it can sell. Good job staying with it.
I know you feel like we do...the reward for a short sale is only partially in commission...knowing what you have accomplished...the anguish you have saved a seller...and in this case...everything you are able to show/tell others...WOW....we think maybe you need to start a national TIGER team...with logoed shirts....no is never acceptable....thanks again and again and again.
Wendy - I had a similar situation. My seller filed bankruptcy without even letting me know, and they also abandoned the property. When I did find out about the bk and asked for contact information and permission to speak with their attorney, their attorney told me to take the property off the market. I did. End of story.
Wendy, what a great service. I bet any other Realtor would have drop the ball and moved on. Love the happy ending!
Ron - The seller was fuzzy about when he filed, so I don't have the exact date. Citi "Was" aware of the bankruptcy from the beginning, and told me so. What I am thinking was they had pursued getting the property abandoned, as the trustee said, then "dropped" the ball for some reason, who know if it was intentional. The trustee could not understand it. But if they were moving to get the house released from BK, that may have been why they thought the short was ok early on. All I know, is I repeatedly asked and confirmed.
I had a couple of listings like that and the attorney for the sellers was a nightmare. I have another one that might go this route, so I appreciate the info.
Ditto on the Countrywide situation. My client's house never was included in the bankruptcy, we got a letter from the trustee stating so, but Countrywide still wouldn't move until the bankruptcy was discharged. Finally got acceptance but lost the first buyer, got another, 5 months to the second acceptance, now due to close and just passed the one year mark. I still will do short sales, but will be picky about the lien holders. I know several agents who do shorts by the dozen, and I call to get their opinion of the lien holder before I commit to list the house.
Dear Wendy,
First you provided information on bankruptcy and short sales that I was not aware of so thank you for your valuable information.
Secondly, it is wonderful that you saved your seller from a foreclosure with your knowledge and persistence. You made a home buyer very happy as well. This is what being a Realtor is all about.
Great Info, Wonderful story!
That was a great outcome. We have found Citi and other large banks change their thinking in recent weeks and moving to Foreclosure and not wanting short sale offers. From what I have found out the banks want to use the rest of the year clearing their books of deliquent mortgaged properties via Forclosur process rather than loan mod or short sale so they can start 2010 with the least amount of burden on the books. And with TARP being used as an asset they are not worried about the losses being taken in forclosure/auction. Since it takes time to get from notice to final sale they are starting now so they can have these properties off the books by 12-31-09. So your account of the trutee helping was very kind on his part and a reminder that we all need to do what we can to help those that deserve help to avoid the process of losing their homes.
What about the other spouse? If their name is also on the deed of trust, you may not be able to rely on a judicial power of attorney. The buyer's attorney may not allow it. This actually happened to me last year. Do yourself a favor and see if you can get the other spouse (if they are on the deed - or even if they are not, since it was part of the marital estate) to sign the purchase and sale agreement and closing paperwork.
Good story and something to remember as we wade through the Short Sale jungle. The real miracle is that you could actually speak to someone at the bank.
Wendy ... good story ending about the bankruptcy court informing you and others about abandonment of property with no equity, so that the short sale can proceed. Many BK court trustees would not be so helpful. Congratulations to your buyer client there also.
Wendy, I'm not a Realtor, but your persistence only reiterates my feeling that a good Realtor is worth their commission. Also, thanks for the education on short-sales and bank owned properties.
Wendy, this is why I love to spend some time reading posts here on AR, the feature is well deserved because it has enlighten all of us, I did not know about the "abandonment" but thanks to you, now I can even use that word in my newly expanded real estate vocabulary. Your clients deserve YOU, we here on AR appreciate you.
Antonio
Good for you!!! I know it took time to research but you came out the winner for the Buyer & Seller. More agents should be as conscientious as you.
I cringe every time I read a story like yours and that is because here in Hawaii, Realtors are not allowed to have ANY contact with the seller's lender due to our ACT 137. Do you think your outcome would likely have been different if you were not allowed to talk to the bank?
ACT 137 was intended to protect distressed homeowners but in the process, it prevents us from doing what you did. There is legislative consideration of exempting Realtors from the act which would remedy that. I hope it passes and passes soon.
Richard - I cannot see how you could get a short sale approved without talking to the bank.
BK's are tricky on top of a short sale, all the tough ones on this deal. Glad at least you've talked to the trustee and it will go smoothly from there. It's wonderful talking to the right people to get things done!
Hello Wendy- A big congratulation for an excellent job you have done to your seller and buyer. This is the type of story that you don't hear from the media about how hard we work to give service to our clients. Most people out there thinks that we are here just for the money and do not realize that we are making less to help lots of consumers that do not understand and in most cases even real estate practitioners that doing the process and not understanding. You are an asset to the business.
Wendy- CONGRATULATIONS!!! On a job well done, you had such an amazing outcome.
THANK YOU so much for sharing your knowledge/experience with us. This post is very enlightning!
More power to you!!!!
Wendy:
Great post! It only touches on the basics of a Short Sale and Bankruptcy but it is good Information. I have been doing “Shorties” as I call them for years. I do a two step listing. I go to the home do my basics and obtain the Lender Information as well as the Listing Agreement. I have a Short Sale Addendum to the listing Agreement. The Addendum states will it will be advertises as a Short Sale and what Conditions must be met. I send the Listing Agreement to the Lenders as Well as the Letter of Hardship and last two Seller’s pay stubs etc… and get them to agree as well on a separate Agreement, which is Addendum #2 to the listing ( Lenders Addendum to the Listing for a Short Sale. This works out really well for me. I do a lot of Shorts and it works. By the way I’m usually a critic of most Blogs but, hey way to go. See ya at the TOP! I give you an IQ Score of 165.
Anonymous because you would not believe who I’am.
Wendy. Nice job to stay with it and find a solution. I find your blog as a great resource for anything dealing with short sales.
Congrats on the featured post!
Conguralation for the happy ending most of time these kind of sales are very frustrating..
Just got word! Sold -Pending 5 Shorts over the phone, took4 days from start to acceptance from all parties. That's listing to Contract to Pending 4 days. You can not beat that with a stick. Commission earned $35,000. Closing next week. Not Bad for 4 days worth of work!
Anonymous because you would not believe who I’am.
Wendy,
Another good post. The steps involved were interesting. I'm about ready to do a short sale, so reading up on different ideas and actions will help me.
Thanks,
Scott
Persitence paid off. What a shame it would have been if the seller had not hired such a caring REALTOR. Your story just proves the point----'Never take no for an answer'----at least the first time around. I certainly learned from your post!
Ray: You think it is hard not wait until your dream of Some Standardized Govenment Practice is put in place. I have never seen the Govenment run it better then private business can run it.
Wendy....great job!! Persistence and patience paid off!!! Keep up the good work!!
Nice post. Another trick to add to my arsenal "abandonment". Thanks for the help
Wendy, Thank goodness your seller is dealing with a pro like you that knows exactly how to handle this type of situation, and doesn't take no for an answer. Great job, Wendy.
Great post. You are correct and the process is a little easier if the homeowner has already surrendered the property to the court. Thanks for the info!