Can I sue my mortgage company for not taking a short sale offer on my home that was $34,000 more than what they sold it for?

I lost $3000in relocation and now I have a foreclosure rather than short sale on my credit record. We had the house sold for $154,000, 3 different times and the last time the bank wouldn’t wait another 7 days for the financing to come through. They sold the house months later for $34,000 less. We left the home as soon as we knew we couldn’t pay the mortgage any longer so that the home could be sold ASAP. We left the home in great shape and removed nothing. I really frustrates me that we tried to do the right thing and the Bank handled things so poorly. Can anything be done?

Asked on December 5, 2011 under Real Estate Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Unfortunately, a bank is under no legal obligation whatsoever to accept or approve a short sale, and is therefore  not liable for not doing so. Or more accurately: you always could have sold your home "short" if you wanted to--as long as you were willing to make up the difference between the sale proceeds and the balance due on the mortgage out of your own pocket. The law does not require a bank to agree to accept a sale for less than the full remaining balance of the mortgage as payment in full of the mortgage--the bank is not obligated to accept a loss on the mortgage. Since they are not required to do this, you cannot hold them liable for not doing it. Even if in retrospect it would have been better for all concerned if they had approved the short sale, the law does not force them to make the best or fairest decisions.


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