If B of A approves a short sale but sells the mortgage before it closes, does the new co. have to honor the existing contract?

Asked about 1 year ago - Vancouver, WA

I am the buyer in the SS. B of A has already outsourced the SS to another company. B of A is in the process of selling a large number of mortgages. I am worried that they will sell this mortgage and we will have to start the LENGTHY process all over. Can they legally sell a mortgage once they have approved the short sale and the closing process has started (but is not complete)?

Attorney answers (3)

  1. Douglas S. Tingvall

    Contributor Level 8

    1

    Lawyer agrees

    Answered . The issue is whether a purchaser of your loan would be bound by BofA's consent to the short sale and the terms and conditions thereof. The answer depends on whether the purchaser had knowledge of your agreement with BofA at the time of its purchase. Generally, a bona fide purchaser (i.e., an innocent purchaser for value without notice of a prior interest) takes free of any unrecorded claims. To put the purchaser of the loan on constructive notice of your agreement with BofA, you may wish to record BofA's short sale consent letter to put prospective purchasers on notice of your agreement and to prevent a purchaser from becoming a bona fide purchaser.

  2. Shawn B Alexander

    Pro

    Contributor Level 20

    Answered . I agree with the previous answer and if they sell, the buyer may be subject to any contractual agreement made by the seller of the loan. Therefore if the deal is in escrow it shouldn't be an issue. If the the buyer of the property has not put any money down and the deal is not in escrow then you may have to go through the process with the new holder of the mortgage.
    Good Luck

    Only If and until you and I sign an Agreement for Legal Services, I am not your attorney. These answers are... more
  3. John P Corrigan

    Contributor Level 19

    1

    Lawyer agrees

    Answered . Depends on the approval and how documented. Did they agree not to sell the mortgage note to another party by reason of a stand-still agreement? If they did not agree to restrict themselves as part of the negotiations (and you did not ask for such restriction) with you as potential buyer then there is little you can do from the limited facts I see presented.

    My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a... more

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