Central Florida Short Sales: No Short Sale for you!!

Reserved for TLW

Hard to say for Florida. In Georgia the buyers and sellers sign paperwork that says if the lender or anybody screws up they will work to fix the porblem. That seems reasonable enough. But to get the kind of message you did.....

BB - that's what I want to know!  Surely they couldn't take the house back after selling it, closing and transfering title could they?  Please let us know what you find out.

BB - If the sale was done here in NC, and the HUD was signed off  by the bank with the deed being recorded. The recorded new owners would own the house. Chase would be left chasing their tail. Gotta be some E&O exposure by the Bank. I would have done the follow-up like you so as not to get my name in the Chase PILE for my next Chase deal. Hope this trend stops and Chase and the gang get a little more organized. Interesting post.

After the closing??? sheeesh. That could get interesting. Of course I'm not a lawyer but I think this could be a huge mess if I was the buyer I would raise a big stink about it for sure. I need to ask this from our RE lawyer and see what he says. ~Rita

In Washington, when the deal is CLOSED, it's done. Finished. Complete--questions of fraud aside, or foreclosure with a redemption period. This one sounds more like Sarah was trying to cover up an oversight on her part (maybe). But you got the job done regardless. The lesson here seems to be prepare for all contingencies, whether or not you've encountered similar problems previously. How would Sarah go about saying "I returned the check and closed the file because the last two months' bank statements from the Seller weren't on file." My other question: Is it customary--or prudent--to send the last two months' bank statements to the lender?

Hi Bob, The bank is not the seller so they certainly can't rescind the sale. What they can do though is cause a whole bunch of aggravation for the title company.

Sherry, On a short sale the lender always wants bank statements. Usually they can't be more than 90 days old. They had bank statements. In fact I had already updated them 2 tmes during the 7 month approval process.

My guess is that the banks are just blowing smoke. But still I want to avoid future issues if at all possible.

Title Insurance. Just one more reason to purchase title insurance. What a mess that could be! How could they unilaterally void a transaction that has already closed?

BB & Sherry,

I work in Washington and got the same threat from BoA in July.  We were only missing a final HUD, so escrow resolved it quickly, but it was 2 weeks after it closed. 

Bryant, I agree the bank is probably blowing smoke. Especially since it has taken this person 2 weeks to get to their post closing package to the investor. Documents have been recorded for 2 week! Give me a break. You seem like a brave soul....you should call their bluff if this happens to you again.....

That's an interesting scenario.  Not familiar with FL law, but in OR - when the Deed is recorded, it's a done deal.  Even the escrow/title company would likely have had written instructions to proceed to close the transaction and record the deed (in fact, there was likely a written document from the lienholder regarding the closing of the transaction).  Seems to me, the SS department was just doing a bit of "housecleaning".  And BTW, what do they mean they are going to "return" the check????  Are you kidding me...they are holding a check for 2 weeks and not depositing and/or applying it to the proper accounts?

Don't think you can undo a Deed that's recorded.  Removal of the lien...just can't imagine a Title co. recording without the authority to remove the lien...yikes!

Have to admit, I haven't seen one like that yet...and hope I never do.

Bryant

If that isn't scary to hear such a thing; have you heard of this happening to others already?

I would love to hear from an attorney on this one. I personal think there is no way after that long of a period they can't turn back the clock. If they can, what does this mean for any contract and the time we have to resend it.

That is so bizarre and they would have a significant title insurance problem if they started doing that. I highly doubt that the big guns in title would look kindly on closing and recording only to have Chase refuse to remove the lien.  

It's recorded right? Yes, it would cause trouble with a lien still on the property. Sad what these banks are doing.

In Oregon escrow as part of their job clears all the liens and delivers to the Buyer ( which is usually another Lender ) A Clear title.

If someone forgot some paperwork then that is there problem. Their best bet would be to beg for the missing items not threaten you.

If they were to threaten me that would be liking poking an agitated Rattle Snake.

Its amazing how Lenders wait to the the last minute and even after the acceptance to ask for more requirements...though 2 months of bank statement is not unusual, they don't seem to know what a check list is.  

Dan, thanks for letting me know. I will let my client know of this possibility so that we can keep their bank statements  updated. Is monthly too often?

Is it me or does it seem that lenders inthe short sale process are forever looking for ways to impede the sale even after the fact?  

Probably need a lawyer for this one. But no matter what the answer, I think the buyer would have some very strong points for restitution.

Thanks guys. I think on Monday I will run this by my title company's legal department. I need some ammo so the next time this happens I can tell them to ask nicely or fluck off :) Sorry but I'm really getting tired of having to jump everytime the bank asks for something after they have kept me and my sellers in the dark for month's on end.

You know, Chase is such a PIA! How dare they say that?!?!? I can't imagine they can do what they threatened to do. I can't stand them. They denied a buyer of mine who works for Chase and makes a good amount of money AND her credit is stellar. She went somewhere else and was approved. No problem. Chase is the worst and they are no different elsewhere apparently.

This is the reason I have been avoiding short sales - however, I can't much longer - about half of all listings are now short sales in Metro Detroit.  It doesn't seem to be that they can do anything once they have signed the HUD and the deal closed.  However I am finding nothing is as it "seems" in this market.  Good to have read this so, if it happens to me, I won't be shocked.

First of all Chase is on my s**t list for many reasons and everyone that can avoid doing business with them should.

In our state, if the deed is recorded and the title policy issued.  The title companies attorneys should handle this for the buyer.  If they don't, there are other options.  

I wonder whether "Sarah from Chase" was simply in panic-mode and trying to talk tough to cover her arse.  Do they really have the authority to undo a transaction that has already been recorded?

The phrase "your failure to plan does not constitute an emergency on my part" comes to mind.  I hope you'll let us know what the Title Co.'s attorney has to say about this practice.

I wonder what Sarah from Chase planned to prove by sending back the check.  Sounds like just a dumb move and a way to waste money.  You have the patience of an angel Bryant!

Tina in Virginia

Whaaaaaaaaaaaaaaaaaaaaaaat????????????  Unbelievable, but I guess NOTHING surprises me anymore....  I agree with everyone else that it is highly unlikly that after the fact they could return the check and cancel the sale.  That just sounds stupid. 

Wow,  you will have to keep us updated on this!  Have you gone to Chase's CEO's Office or FNMA/Freddie/insurer?

Bryant, I wrote over on SSS about a major title company starting to have huge issues with short sale lenders pushing the envelope.   Here is another example of when funds were returned or threatened to be returned after closing:  

 Contract written on behalf of a couple as buyer.  Due to credit reasons only one spouse ended up on the loan documents.  It was on the final HUD - but apparently not cleared through an updated approval letter.  It was noticed until after the lender did a final audit.  They returned the money via wire to the title company and wanted to rescind the short sale, as the final sale was not in compliance with the approval letter.   

In California, there is a Civil Code section that states a lender must honor their written demand, if paid during the allowable term of the demand.  Normally this relates to money - but as you have experienced and in the example above - they are now bouncing on terms other than money. 

When money just reappears at the title company, it creats a horrific nightmare for them.  Title insurance does not mean they are there to continue the fight of the short sale after coe.  Title insurance is there to protect for normal liens and judgements that are missed, not to pick up losses because the lenders want to push the envelope on technicalities. 

I look for some interesting changes from the title industry as the continue to navigate serving the public and our industry without taking on huge additional exposure.     

 

 

Makes you wonder....

What if they call 6 months after it's closed with the same kind of story??

That would give the buyer plenty of time to have it in good repair and may have even already sold it to someone else...

What if during that 2 week period the buyer HAD sold it to someone else?

How to find the answer to the question?

Interesting post....

Bryant, they can't do anything. I had a situation where the 2nd lien holder gave us an approval letter indicating they need 3k to release the lien. A month later (after close) they called me and stated that they made a mistake on the investor guidelines and need 4k more or they will reverse the transaction. It never happened as the title company told them "tough". It's been three years now and they never got their money nor did it ever come up again. They (the 2nd lien holder) basically had to eat it.

Every situation is different, but in this case regarding the bank statements, they can go pound sand as the bank statement is not mentioned in the approval letter.

It's arrogance on the lender's part, pure and simple. I'd love for you to call their bluff and tell us about it.

I've had similar calls where weeks later, the lender calls wanting some additional paperwork before they close out the file.  Not sure what to think on these.  If for some reason they refused to release the lien, I could see a major lawsuit ensue.  Don't know what the answer is though except to try and comply as best you can.  The short sale lenders are simply incompetent.

It is quite common for post closing to audit within 30 days for items that may have been out of compliance for the bank in order to sell to the investor (almost certainly Fannie or Freddie based on your price point). The request did not seem out of line ALTHOUGH the loan originator (Chase directly, broker, or correspondent) would typically be on the hook under the terms of the buyback provision, as it was an issue regarding the loan, not the listing.

It sounds like you've done the right thing in order to avoid future grief....in the future, you could certainly tell them to take a flying fluck......:) Hope you are well.....its been too long since I've been around.

BB--I think she's blowing smoke--here if the Deed is recorded, which is done same say or the following business day, the deal is DONE!  They signed off on the HUD-1 and can't go back!  I'd LOVE to see what happens if you called their bluff...

How can escrow record a deed if the lien has not been irrevocably removed? 

Bryant - I dont see how they could reverse title once recorded.  They probably knew they screwed up and put the pressure on you to perform to Cover Their own A**.   There are way too many cooks in the kitchen over at the lenders house and they usually drop a ball or two.  Three days after I can see it, 2 weeks...unaccaeptable.   Clear To Close is Clear To Close.  Crazy :)

Wouldnt it be nice if the lenders had to follow the rules like Everyone Else?????  Shangrila!!

I believe I would have invited Sarah to go ahead and return the check. Since the deal was done and recorded, if I understood you correctly, there is nothing that could be done to undo it absent the allegation of fraud.

Then let Sarah explain to her supervisor why she was sending out Chase's money. I would love to be a fly on the wall to hear that conversation.

Then you and your buyers could put Chase thru the same sort of nonsense that they try to put us thru in order to get their money back from your buyers. I think that would be a hoot! You would of course, have to eventually return the money, but it would be an interesting story to tell to us AR's.

"This is a great time to buy a house".

Akron, Ohio

Thankfully short sales are not a huge part of our market here in Del Norte County, CA.  I hope to see that trend continue.  The few I have been involved in were upleasant for the buyer, seller and both agents. 

Like someone before me, I strongly recommend my buyers to purchase title insurance on all REOs and short sales.  It gives them protection from anything like this.

Although I can understand wanting to stay on the Lender's good side (for future relations), I don't believe  that they can force the issue the way that they're trying to.

I agree, it'd be good to hear from an attorney.

Bryant- They can do whatever the heck they want to do prior to recording the documents. 

Sally, Debe, and agents from Oregon commenting- In Oregon and Hawaii- you get your recordings all done prior to the buyer getting keys. That is NOT how it happens in Florida. 

In Florida- we go to closing, everyone signs the docs, then the buyer gets the keys and moves in. Then the title company sends the deed to get recorded and the lien releases to get recorded. Recording times can take anywhere from a few days to 6 weeks. 

The short sale lien holder does not send over the lien releases until closing and Chase does not send theirs til after the closing HUD has been turned into them and they approve the last final HUD and see the check. Then they send the title company the go ahead to record. 

So technically- they could hold up the closing after the fact. Katerina 

Hello Bryant, that is an interesting twist on things that we don't seem to see here in Washington State, as our Escrow folks usually will see closing funds, and then record with the County on the same day.  Seems to me your Chase friends need to view the video on the TLW's Counter-Offer.  Happy New Year!  John

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