Now for the second interesting transaction that I have run across in the new year.
I have been representing a purchaser that was purchasing a REO. "REO" stands for "real estate owned" and refers to a situation where a bank consummates a foreclosure action and then takes the property back at the auction and sells it. Of course, as the bank has already lost a tremendous amount of money, its goal is to sell the property as quickly as possible. Indeed, banks are not in the business of managing real estate and instead are in the business of...(well, let's keep reading and try to think what possibly banks could be in the business of).
My clients purchased the property at $370,000.00. However, they were advised that in order for their offer to be accepted, they had to apply for a mortgage with a lender who is affiliated, as in partly owned, by the selling bank. My clients did so but the bank that they applied to dragged their feet and the transaction became protracted. Parenthetically, this kind of "service" often occurs when someone is compelled to use and isn't given free choice.
My clients eventually went to another bank who quickly gave them a mortgage commitment and we want to close. The problem is that the selling bank refuses to close. First they defaulted my clients and tried to forfeit their down payment. I responded with a few emails and letters and they relented and refunded the down payment. However, my clients don't want their down payment back. They want the house.
Now here's the punch line. Even though my clients are ready to close at $370,000.00, the bank has relisted the property at $350,000 and is trying to sell it to a third party. Thus, they will lose at least $20,000 when they finally do find another purchaser. Of course, who knows how long that will take and what price they finally end up selling at.
My clients have not relented and instead we have commenced action to compel the bank to sell and placed a lien against the property I will hopefully be able to relate some good news in the near future.