Mortgage company sent funds back and foreclosed

6 Replies

Hello all,

I have a crazy situation and wanted to see if anyone else has dealt with this.  We bought a house and closing docs were signed off on the Friday prior to Labor Day.  The deal funded by noon on the Tuesday since Monday was the holiday and the funding department was backed up. 

The deal closed, funded, but apparently the mortgage company sent the funds back and said they foreclosed on it.  I've never dealt with this before in 14 years.  

What can we do?  Thanks in advance.

Manesh

Originally posted by @Manesh Hardeo :

Hello all,

I have a crazy situation and wanted to see if anyone else has dealt with this.  We bought a house and closing docs were signed off on the Friday prior to Labor Day.  The deal funded by noon on the Tuesday since Monday was the holiday and the funding department was backed up. 

The deal closed, funded, but apparently the mortgage company sent the funds back and said they foreclosed on it.  I've never dealt with this before in 14 years.  

What can we do?  Thanks in advance.

Manesh

 Lots of missing information.

What date was the closing? What date do they say they foreclosed? What date did the bank receive the funds? When Escrow contacted the bank for payoffs, what conversation happened about a pending foreclosure? Did the bank say they would postpone the sale? Would your purchase price cover all principal, arrears and legal fees or was it a short sale? Will your lender allow you to buy it directly from the bank as an REO? Is it such a great deal that you want to pursue it?

@Manesh Hardeo As Mike said, lots of missing information. You and the title company are probably lucky that it ended this way with your money returned to you and no loss. However, whoever represented the seller should have let you know what was going on and that there was a pending foreclosure sale. Maybe the seller didn't disclose what was going on or maybe was no longer even the owner when he tried to sell. it would be interesting to know the details....

@Manesh Hardeo When you say that the deal "closed," do you mean that the title company recorded the new Warranty Deed from the seller to the buyer with a new Deed of Trust? That could be a mess.....

Yes, definitely some missing pieces here....it seems impossible a title co. could get a pay off from the lender, and not know the property was foreclosed.  Even in non judicial foreclosures isn’t a NOS recorded somewhere?

@Manesh Hardeo Since you got your funds back essentially you have been made whole so not a lot you can do. However I would have the title company confirm that the property was foreclosed.

If the auctioneer said SOLD before good funds arrived in the hands of the Trustee ... the third party deal is dead.

Somebody sat on funds for a long weekend with an auction sale pending? Was nobody in consistent contact with the foreclosing attorneys? They just sent payoff to the lender?  Man did somebody botch this one. Sorry.