Saturday, July 25, 2009

Unwitting Prospective Buyer Gets Caught Up In Controversial Short Sale Flipping Attempt Involving Vacant Home In Foreclosure

In DeWitt, Michigan, columnist John Schneider of the Lansing State Journal recounts the story of a local woman who got screwed over in an attempt to buy a vacant home in foreclosure from a local real estate operator, himself attempting to acquire the property through a short sale, to be followed by an immediate "flip" of the home at a higher price to the woman (all without the apparent knowledge of the lender that was being asked to approve the short sale).
  • Reeling from a traumatic divorce-in-progress, Christina Thelen moved, with her three children, into her aunt's basement. That was in February. In March, things started looking up for Thelen when she made an offer on a three-bedroom ranch in foreclosure on Rambler Road in DeWitt. The vacant house had been on the market since August. The price had dropped, in increments, from $159,000 to $128,900 - with no takers. Thelen offered $118,000, or so she thought.

  • Responding to my inquiry Wednesday, Bank of America's Jumana Bauwens said bank records indicate the offer was only $74,000 - and was rejected. When I told Thelen that Wednesday, she was shocked. "I can understand why they would reject that," she said.

***

  • Working through a company that specializes in short sales - EZ Home Ownership Realty of Grand Ledge - the agent representing the seller, Steve Osmar of the RE/MAX office in Delta Township, was informed that Countrywide, the mortgage holder at the time (later acquired by Bank of America) had verbally accepted the deal. Jerry Ballard of EZ Home Ownership told me Wednesday that Countrywide had, indeed, OK'd his offer verbally. However, Bauwens said a verbal acceptance would run contrary to standard practice.

  • As for the difference between the $118,000 Thelen was willing to pay and the $74,000 EZ Home Ownership offered, when I asked Ballard about it, he didn't have immediate access to his records, so he couldn't confirm the $74,000 figure. He did say, however, that the difference between what a buyer is willing to pay [him] and the offer his company gets a bank to accept represents various fees and expenses, plus his profit. Listing the various agents involved, Ballard said, "None of us is a charity."

  • Based on the belief there was a verbal acceptance - plus the fact that Thelen was, as Osmar put it, in a "housing crisis" (her and her three kids living in a basement) - Osmar drew up a lease agreement that allowed Thelen and her kids to move into the Rambler Road home the final week of May. "This home meant so much to us," she said. Thelen expected to close on the house in June, and began fixing it up. She painted, repaired the air conditioning, rehung kitchen cabinet doors, spread mulch ... About $1,200 worth, she figured.

  • On Father's Day, Thelen got the bad news: The deal had fallen through. She and her children would have to vacate the house.

For the story, see Short sale stumble gives would-be homeowner 'short end'.

For other posts involving similar types of short sale flipping deals as the one described above, see:

posted by Home Equity Theft Reporter at 4:15 AM