You think its just the bank that puts up barriers to a successful short sale?

Below is a short post by an attorney that we have worked on a lot of cases with, Richard Zaretsky.

There has become an endless parade of lenders coming to court to have a scheduled foreclosure sale cancelled because the lender is considering a short sale or loan modification. In an interesting twist, the courts are frequently DENYING the cancellation requests and telling the banks to “hurry up and make up your mind”. Why?

I go to court a few times a week on foreclosure cases, usually trying to control the “Foreclosure Express” so a short sale or loan modification we are working on can proceed. Without fail each day a good number of hearings are for cancellation of a foreclosure sale scheduled for the following week. Typically these foreclosures are on a property where the lender is in the midst of a short sale review or loan modification review. Also typically the foreclosure was filed more than a year prior.

ARE THE COURTS BORROWER FRIENDLY?

One would think with the lender requesting a delay in proceedings, the court would bend over backwards to help the borrower – but that is no longer the case! The judge’s statement to the lender is that the lender should make up its mind in the next few days to either accept the short sale or loan modification, or dismiss the case.

CASES ARE JUST TAKING TOO LONG FOR DISPOSITION

The point the judge is making is that the lenders are just taking too long to get things done and that is causing a never ending backlog of cases.

DEPARTMENT OF JUSTICE SETTLEMENT

This does not apply only to the foreclosure sale cancellation request for a short sale or loan modification. Lenders are now coming to court to ask for delays based on the Department of Justice Settlement. The judge’s response to that request is, “Show me where it says I don’t have a say in when the foreclosure occurs.” Of course the settlement does not take away the court’s ability to manage its caseload. So again – the judge says, “Either proceed or dismiss – but it’s taken long enough already”.

THE GOOD OLD DAYS TIMELINE

The point is that a foreclosure should take 100 days (in Florida and several other states) but too many cases stagnate for years. Likewise, a short sale approval or loan modification should not take 3, 4 or even 6 months to get considered by the lender – especially if they are working a dual track (foreclosure and short sale or foreclosure and loan modification) on the loan.

This is very important information for borrowers that think they can plead their case to the judge to delay a foreclosure sale. In most of these cases BOTH THE LENDER AND BORROWER ARE IN AGREEMENT – but the court does not care – it wants a disposition of old cases one way or the other.

IT CAN STILL BE DONE

Getting the court to agree to a cancellation of a foreclosure sale is not out of the question. Examples of likely success would be (1) short sale approved but sale not occurring before scheduled foreclosure sale date; or (2) short sale approved and buyer suddenly walked but new buyer just now signing contract; or (3) loan modification in trial stage but not formally approved. There are other examples which may not be so obvious - an experienced attorney with experience in the jurisdiction of the court should be able to figure out whether the request for a cancellation will work or not.

And as an update (a week after this blog was originally written), on a different floor of the same courthouse in front of a different judge, identically similar motions to cancel foreclosure sales were being heard, and the judge in that courtroom granted every one. Go figure!

Borrowers, and their Realtors and attorneys need to be aware of what the typical court (and judge!) mind-set is for each county or jurisdiction. What used to be a simple matter of agreement is no longer the case in front of many judges.

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Copyright 2012 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com .