Question on short sale offer on note going to auction in a week

[Bob Malecki]

We have a first position note on a SFR in the Seattle area which is going to auction on 11/4. There is no subordinate debt or liens on the property and there is equity. The borrowers still occupy it and have it listed with a broker on the MLS. Today I received a short sale offer which looks acceptable, and this means that we will have to postpone the sale. I'm a bit skeptical that this may be a tactic to just buy more time.

Does anyone have any recommendations on additional measures to take if we decide to accept the short offer? The borrower's agent sent me the offer and buyer prequal letter, but wondering if there is anything else we can legally do to mitigate our risk. @Dion DePaoli, any thoughts?

[Dion DePaoli]

Bob,

Just as a rebuttal to those who vote to proceed with foreclosure and forego any sale.  You should have your foreclosure counsel involved with the approval of the sale.  Especially if you are bumping up against deadlines.  The details missing regarding equity and the timing of the events in file will matter.  On one hand you have agreed to work with the borrower to allow them to sell their house which is an alternative to foreclosure.  On the other hand you are at a decision point in the foreclosure case which can be seen as dual tracking if you proceed with sale.  I would move forward carefully.  

It's not hard to imagine that a borrower claim they were in distress and lost out on equity due to the lingering foreclosure or claim the big bad mortgagee foreclosed on me after he said he would let me sell my house.  Like I said, get FC counsel involved and have the bless the plan of action so you don't work yourself into a corner.