Banks Ready to File Suit Against Short-Sellers

editor’s note: This is part of what we have been talking about. years down the road these bankers are looking to sue borrowers for deficiencies after people recover from the disaster the bankers caused. Also set to explode in a few years are title defects that are incurable resulting from the securitization of loans and incorrect parties bringing foreclosure actions and taking title while the Lender sits blithely unaware that his rights are being twittered away.

Banks Threaten Lawsuits Against Short Sales

Updated: Oct 05, 2009 4:25 PM

Banks Threaten Lawsuits Against Short Sales

There’s a new warning out for struggling homeowners who think a short sale is their way out of a foreclosure. Big name banks like Bank of America, Citibank, and Wells Fargo are threatening to come after those who sell their homes through short sales years later once their credit is restored.

Realtors say banks threatening to do this are causing some fear, but homeowners have no other options but to turn to short sales over foreclosure. Remember that bail out money these banks were given? Realtors say if banks do go after people, that bail out money should be given back to the government.

Realtor Tammy Truong started in the short sale market two years ago when she noticed home owners were desperate and didn’t consider foreclosure as an option. “They’re confused and don’t know what to do. They want to do the right thing and they don’t want to walk away and foreclose,” she said.

But short sales are now being threatened by banks. “They are pushing out the short sale process for as long as possible and looking for new avenues to try and sue people after a short sale is completed,” said Realtor Justin Chang.

Chang says at a recent realtors meeting, big name banks were on hand and made it clear they had no problem with going after homeowners who short sell years from now as they attempt to improve their credit. “In a meeting with a lot of bank officials who came out here, they came out here and said we are able to track for up to six years peoples credit, so if they do get back on track and are able to purchase again and employment comes back, that’s when they’ll try to tag them and sue them for the difference,” he said.

Both Truong and Chang say banks were given millions in bailout money to help them survive and help the crippling housing market. Going after owners who complete short sales was not part of the plan. “If they go back after all these people, I feel they should give back all the bailout money,” said Truong.

Realtors are turning to Nevada’s Congressional Delegations, hoping to get them involved in this and stop these banks before anyone is sued years from now.

Tags: bankruptcy, borrower, credit, disclosure, foreclosure defense, foreclosure offense, fraud, Lender Liability, Mortgage, securitization
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