Short sale advice

[Mary Ann Rocco]

Hello. I went into escrow last August on a house in Huntington Beach, CA. It's my dream house and the house I want to live in. I'm a first time buyer. I do have an agent.

There are 2 loans, the 1st with GMAC and the 2nd with Chase. There have been nothing but delays and it's all due to Chase dragging their feet. GMAC is not really short selling by more than 10-15K. The Chase loan is 175K and 44K is what is being negotiated. No notice of defualt has been filed by the 1st even though the owners moved out last July and I assume stopped making payments. The seller's agent had a short sale negotiator out of his office. In October the seller received an approval letter from Chase that basically said you can sell short but you still owe us the rest of the money. The seller hired an attorney after that. I've been told numerous times it was a done deal just waiting for issuance of letter...but it was all smoke and mirrors. No letter yet.

So here I am in April. Is it reasonable to assume that Chase is not moving forward either because they have no motivation since no threat of forclosure, or maybe because the seller's are not at rock bottom financially? My agent gets little information out of the attorney except to say it will happen soon. When asked why she thought no notice of default had been filed by GMAC she said they were being really understanding...WHAT? Ridiculous, but I can't figure out why no notice of default.

I'm considering closing the escrow account, i.e. backing out of the deal, to see if that makes something HAPPEN. I would be thrilled if it foreclosed and I could buy it as an REO. My fear is that by backing out now they will just repalce me with another buyer, then I lose my dream home.

Does it make sense for me to hire an attorney for a consultation on what I should do? Any referrals to someone that might provide a consulation for an hourly fee rate in California?

Any referrals or insights would be appreciate.

Mary Ann

[Scott Hubbard]

The problem is there is already any attorney involved. At $300.00 per hour, they will kill an value left in a real estate deal.

I get deals done with GMAC and Chase all the time and there is no reason it should take seven months since your offer is equitable. The more time passes, the less the value is left.

My guess is the attorney is trying to argue a deficiency waiver for his client on the second mortgage and/or are requesting his fees be paid by the GMAC. The problem with the 1st paying the legal fees? This means the second must agree and since there is no deficiency with the first, there is less of a net proceeds for Chase.

If this is the case, then you, my friend, are caught in between an attorney and his livelihood. Not a good place to be.

In order to determine whether the above is indeed true, you should:

1. Have your agent ask for a clear and concise clarification of where this negotiation stands in order.

2. Find out if the second mortgage is an HELOC or another non-purchase money loan.
3. Ask for a copy of the net sheet submitted to the lender as part of the short sale package or subsequent counter-offers.

4. Ask the attorney point blank if he is trying to get the lenders to pay for his fees.

If the attorney is indeed seeking his fees to be paid or seeking for a deficiency waiver, you could be in for a long battle.