Shorts sales/foreclosure process?

sellingshort2008August 20, 2008

I also posted this on the Homes forum, but I thought I would ask try here as well. After a year of trying to sell our old home without success, we hired a lawyer to help negotiate a short sale or deed in lieu of foreclosure with our lenders. When we first met with this lawyer, he said it would be highly possible to get our second lender to settle for $5000 instead of the $50000 we owe. He also said he has realtors he works with regularly for short sales. Since we hadn't been able to find a realtor experienced with short sales and had trouble even finding a lawyer to take the time to meet with us, we went ahead and retained him, even though it all sounded a little too easy. That was three months ago, and so far he has done nothing. He said that the forclosure process takes at least six months and that our lenders would not even consider anything until we were at least three months behind on payments. This month we are officially three months behind.

This lawyer also advised us to rent out the house and not tell the property management company we hired what is going on with the house. So now we are contracted with a prop management company and have renters in the house on a 6 month lease. Meanwhile our lenders are still calling us, the lawyer hasn't done anything except send us an itemized bill that shows almost all of the retainer being spent on things like "dicated memo to client" and faxes to the lenders that were never received. It takes several phone calls to get him to call us back, and then he charges us for the time spend talking with us, even though the purpose of the call was to remind him to follow up on things he had not done.

I feel very uncomfortable with this whole situation, not making the payments and having this nice unsuspecting family living in the house not knowing that they could end up getting evicted if we foreclose before their lease is up. I checked the laws in the state and the bank can foreclose in as little as 90 days, which is where we are at. The few times I have spoken with the lawyer since the original meeting, he has assured me that this will take at least 6 months and we will have plenty of time to end the contract with the prop management co. and get the tenants out, but I have to wonder if this is correct.

Does it sound we were taken by an attorney who has no intention of helping us, or is this the normal process? He told us not to talk with the lenders, but I ended up having to the other day because I couldn't get in touch with him to do it for us and now I am nervous I gave away too much information. If anyone has experience and advice on this kind of situation, I would appreciate the input. Thank you.

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Hi, this is a too-bad situation. What you really needed to do is first somehow get references on this person, even if it meant going to the local Bar association or somewhere to do it, because it does sound like he may not have done the proper thing. I'm not speaking of the process itself, the sequence, etc., as I certainly don't know anything about it, but the way in which he seems to have gone about things in general is a bit strange, not the least of which would be 'counselling' you to be shifty with the mgmt. co. I do not think it's a 'normal' way to do anything and I'd ask the Association or the local real estate board what to do about it all. You don't want to get worse advice now (from others) on top of bad. Good luck!

    Bookmark   August 21, 2008 at 6:08AM
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Sounds like you hired a scumbag.

Will the second holder settle for $5k on $50k - probably not. They might be wise to since they are likely to get zero, but "banks" and "wise" aren't in the same sentence too often recently. Frankly, the chance of a short sale working with 2 lenders involved is pretty slim.

Will the lender foreclose? Eventually. You lawyer is probably right that it will take a while though.

His advice about renting the house is incredibly unethical. Fortunately, recent laws protect the renters from your unethical behavior. Even if the property is foreclosed on, the new owners are bound by the 6 month lease. The current tenants cannot be evicted as long as they make payments.

At this point, your best bet is to contact the National Foundation of Credit Counseling. That is the real, legit public service group - not one of the infomercial people. They have links on their site for finding a certified counselor in your area. I'm sure they will tell you to drop this bozo lawyer and to start making realistic plans to improve your financial situation.

Here is a link that might be useful: NFCC

    Bookmark   February 28, 2011 at 3:23PM
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bill, that post is over two years old....

    Bookmark   February 28, 2011 at 3:40PM
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