Seller asking for damage money while in Short Sale

The Seller owes the Lender the money for their mortgage that has not been paid since July. I doubt they will get anything from them. It will probably cost more to file the lawsuit that whay he can expect to ever recover.

Concentrate on the Short Sale.

The mentality of homeowners today blows my mind. This person never owned the property; he/she merely put a downpayment on it to live there and continue paying the agreed upon price. He/She stopped paying. The bank is holding the bag and will not likely recoup their loss. What is this person thinking??? I can't see that he has any rights and there is no guarantee a short sale will fly not to mention the foreclosure process may have already begun.

In most jurisdictions that I have heard about, the lender's lien or trust deed is "conditional." That means that is not an actual judgement or deed until a court says it is. When a lender decides to break into a home there is a risk that "My heirloom diamond ring is now missing."

It becomes a business decision as to whether to seek damages from an overly agressive lender who changes your locks. I believe that courts take a dim view of this activity, and that they usually require some substantial evidence that an occupied home is actually abandoned.

This might not help you much with your decision, but it should give you some context for thinking it thru.

"This is a great time to buy a house!"

I believe your client seeking damages will not have to worry about the short sale part of things. These would be two different departments at the lender and heaven knows these guys don't talk to each other. Shoot, even related departments like loan mod and short sales rarely communicate at most lenders.

Now as to the practicality? It won't be worth suing (IMHO) but one could still "ask" for reimbursement.

Like the others here, I don't think I would push this very far. However, it could become a negotiating item during the short sale process.

Steele, new CDPE

Although I agree with most of the comments above, I'd like to post some food for thought.

Firstly, we don't know where this property is located, and as laws vary from State to State, it is hard to give any advice. Having said that, most loan servicers order BPO's... now why do you suppose that is? It isn't only to get an opinion of value, BUT on most BPO forms that I have seen it also requests info on whether the house looks occupied or abandoned. That is fairly easy to tell if the BPO agent actually GOES to the house. An agent could also take it one step further, as I have done if it is difficult to tell whether the house is occupied and actually knock on a few neighbor's doors and ask "hey, does anyone live there?

I have experienced a prolific amount of lender abuse lately, and have called Fannie Mae or Freddie Mac regarding this. I have also recommended legal counsel, of which some is free in certain States.... then again, as I said in the beginning, we don't know where the house IS and the that is the crux of the whole matter.

Now, since the owner is going to try doing a short sale anyway, and if it were ME, I would try to find out WHO it was that changed the locks and caused the damage and go after THEM. Yes, they will say they were given authority by the bank to do so, and guess what? THAT is where you have proof the bank proceeded without verification of abandonment.

Where will this get you in the long run? Maybe nowhere, maybe somewhere, it all depends on WHERE the house is located and what the laws of that State mandate.

Is it worth it to sue? Not imho, but would I gather some info to perhaps make a deal with the bank down the road? YES.

Will it be worth the time and effort? Maybe, maybe not. But I would love to see the look on the faces of the people who actually changed the locks and did the damage to the house, and I'll almost bet you that they would settle with the homeowner, however, I wonder one thing (aside from where the house is located) WHERE was the homeowner when all of this lock changing/damage was going on?

Why did the BPO show the house as vacant (ok, more than one thing, but I'm pondering here).

Is the seller being truthful with the agent? If I were the agent of this deal, I think I'd knock on a few neighbor doors and ask some questions, because I hardly see how all of this could happen with the sellers being innocently unaware - if they truly lived there.

My .02

Thanks everyone for your input. All these comments really helped. I think I know what to tell my seller without offering my "personal" opinion as a real estate professional. ("Personal opinion" meaning whether I agree or not to his pursuing for the damages. I will only advise on the risk or no-risk involved if he does).

My main concern was if the seller writing to the legal department would pose any harm to the short sale. He's not going to pursue "legal" action as it wouldn't be worth the money. But at least to see if he can recover for damages that clearly was not abandoned. (mowed lawn, furniture in place, clean, etc, etc.)

This property is in CA.

It still 'mystifies' me to hear that someone who is not paying as agreed on a legal contract thinks they have 'rights'. Since the payments were not being made I can see why the bank concluded the property was abandoned. How has the mentality in this country done a 360 on responsibililty? If you miss a car payment it is repossesed; often in the middle of the night. Same for a boat or any recreational vehicle. Why do people think they own something when they've only put a fraction of the purchase price down and stopped making payments? No wonder this country/housing market is in the sad shape it is in today.

I understand where you are coming from. Unfortunately much of the "responsibility" is no longer possible as job loss is now the number one reason for foreclosure.

Believe me, these people would love to pay.

And foreclosure is a process. Even in the fastest states it takes some 6 months to complete. In some it is more like a year. And until the property is completely in the bank's hands (legally) or is it truly "abandoned" the borrower still has rights to the house. It is still their's.

A rekey before abandonement is not a right of the lender. They know it as well. But mistakes are made. Luckily most banks will own up to the mistake.

As for suing...naaa.

And just as a point of fact, a car isn't repoed at the first missed payment and rarely in the middle of the night. Don't you watch those shows:>)

Well Steele, you've touched on the point I was attempting to make. In this era people feel they have a right to ownership merely because they agreed to pay and put money down. In era's gone by people understood the bank still owned the property and celebrated when the debt was paid in full with mortgage burning parties. Job loss is unfortunate but not the concern of the bank. There is a legally binding contract involved and the party is unable to honor it. Rather than look for empathy from the lender (who by the way is 'underwater' in this market) alternative plans should be made. The premise of the original post was the homeowner A. considering a short sale B. asking the legal department for damage reimbursment from the rekey. My point is the mentality of entitlement spread across the nation when people cannot live up to their end of the bargin on a legally binding contract. If one is 'allowed' to remain in the property for six months to a year (it is 90 days in Arizona upon notice) they have lived for free which would be considered a gift in another era. The current mentality thinks it is a right and the bank should consider a bail out (short sale) and when it doesn't happen the property is stripped and rarely are the residents prosecuted. BTW not everyone undergoing short sales or foreclosure has had a job loss. Many decided that due to property value decline they'd paid too much for their property and decided they didn't wish to pay good money after bad. Instead of holding fast they felt it 'unfair' and decided to change the rules or disregard the 'legally binding' contract. Hence; the switch in mentality from responsibility to entitlement.

Your reference to 'shows' is likely the answer. The current mentality is based on fantasy not reality. And yes, vehicles have been known to be repossessed 'in the middle of the night' that is why people park them elsewhere when they know they are behind and I never mentioned one payment.