Just heard word that there are some lenders now who will not fund transactions when the seller’s property is in the redemption period. Apparently Wells Fargo now has a corporate policy that it will not fund these. There are other mortgage lenders doing the same thing. It’s not clear yet whether the other big lenders such as Bank of America, Citi, or JP Morgan Chase will follow suit.
There is confusion as to whether or not the underwater home seller who has had the Sheriff’s sale but is now in the redemption period, can actually redeem the property after it has been sold and closed by the new buyer. In Minnesota the seller trying to do the short sale has to sign the Certificate of Redemption from the Sheriff’s department. There is record then that the seller redeemed the property as it is being transacted and closed with the new buyer during the short sale.
This is not good news in any way for short sales or for the housing market.
If you are a seller who is facing foreclosure or are in some state of trying to sell your home short, in Minnesota, you have the right to delay the Sheriff’s sale by 5 months, but you have to file the proper paperwork with the county in a timely manner. You may want to seek legal counsel. At a minimum, check out the Minnesota Home Ownership Center for how to do this. When you do extend the Sheriff’s sale, your redemption period goes from 6 months to 5 weeks.
If you’re looking at a property and wondering if it’s already had the Sheriff’s sale or not, check out the site here. It’s a great research tool.
I’m beginning to think it might be best if short sales were just made illegal. Perhaps everything should just go to foreclosure. That way we would either have traditional sellers or banks, but at least we’d know what we’re dealing with. It’s hard to know with short sales if you actually have a house you can sell or not.
It used to be that all the uncertainty in the transaction was on the seller’s side. Now it appears we have guesswork as well on the buyer’s side. This is going to make a complicated and challenging transaction – i.e. shorts sales – even more so.