Why isn’t the bank doing a short sale?

I had a great question asked this week. The person asked me about a house in their neighborhood. It had been vacant for a while and they were interested in the stats and possibly purchasing it. I looked up the house and found out the property was scheduled for foreclosure in less than a month.

The question: “Why isn’t the bank doing a short sale?”

The consideration for a short sale is requested by the owner of the home. It may be in the owner’s best interest to do a Bankruptcy, and let the property foreclose. If the owners had consulted with a tax attorney, they may have been advised to move forward in the manner they were.

Doing a short sale is not the choice of the bank. They (the bank) cannot opt to sell the property, as they do not own it. The current owner could at the last minute pay the bank the fees owed, renegotiate their loan and get out of default. The foreclosure process allows the owner to get out of trouble if they can.

The bank is not at liberty to do anything until they have ownership of the property.

Comments

  1. The banks don’t have the authority to tell a home owner to do a short sale. It is up to the home owner to consider their options. The bank’s power is rather limited in this respect until they foreclose and gain ownership of the property.

    And Yes Grant, we do have a rather regal last name 🙂

  2. Irene – that is an interesting perspective. Are banks allowed to call these delinquent owners and firmly suggest a short sale? Or is there are 3rd party service that is allowed to pre-market as a potential foreclosure?

    BTW – I love your last name…it seems very regal if I do say so myself!