This deal is complicated. The seller was doing a favor for a friend and got a mortgage for them. They lived in the house for two years and after the arm adjusted, they stopped making payments. They asked for our help. While contacting the bank today, HSBC told us that the house was sent to the REO department and would be assigned to a Realtor in two weeks.
My question is: The seller is unaware of any correspondence regarding a sale date and the home occupiers indicated they received no correspondence as well. How can the bank send the property to the REO department without it going to sale first and is it still possible to negotiate a short sale with the bank in this situation?
I would imagine that in your state like the one I reside in (MN) requires the lender to give some kind of public notice regarding the public auction of your home. Here it is MINIMUM 6 weeks in a widely distributed public newspaper. They also typically send several letters regarding late payments and Notice Of Defalt to the home owner. Whoever has their name on the mortgage that is being foreclosed on should be the one recieving the NOD. If they/you are not recieving a NOD then you need to contact the lender and ask to see a copy of the publication. The should have one.
Anybody else have any thoughts?
Your description of this is rather muddled - so I am assuming that the “seller” is someone who potentially defrauded a financial institution by getting an owner-occupied loan on a property with no intention to actually occupy it, instead letting their “friend” live in it and make the payments.
If the scenario above is correct then the “seller” was never notified of the default because the lender was sending documentation to the property. And the “friend” is lying, denying receipt of default notices.
That’d be my bet. And no, a short sale doesn’t work with REOs.
Thank you both for your responses. I started by saying that this was a difficult situation- I do feel bad for the “friend”.