So many of you have voiced the opinion that the lender cannot or should not take steps to foreclose while you are in active short sale negotiations. You have indicated your understandable frustration at the process and wish to pursue the lender for bad faith. As I have said, on this and other forums as well as to my own clients, your lender has no obligation to work with you on any level and the fact that you believe the lender is leading you down a particular path is irrelevant if you are in breach of the contract. Well, finally, I have found a case where at least one judge agrees with me. This was a typical "show me the note" case but one of the arguments to deny the lender the ability to foreclose was that the borrower was actively pursuing a short sale:
Decision rendered June 3, 2011:
Federal Home Loan Mortgage Corp. v. Schwartzwald 2011 Ohio 2681 (Ohio App., 2011):
“In her affidavit, Julie Schwartzwald stated that Wells Fargo encouraged the Schwartzwalds to pursue a short sale of their property. She asserted that, upon notification to Wells Fargo that they had a buyer, Wells Fargo acted in a dilatory manner in reviewing the Schwartzwalds' request for approval of their short sale and led them to believe that the short sale would be approved. The request for a short sale was denied in September 2009, more than 120 days after the request was made. Even accepting Mrs. Schwartzwald's allegations as true, we cannot conclude that Freddie Mac had unclean hands that would preclude this foreclosure action. Once the Schwartzwalds defaulted on their note and the balance was accelerated, the lender was entitled to pursue a foreclosure action against them. See Gaul v. Olympia Fitness Center, Inc. (1993), 88 Ohio App.3d 310, 315. "A lender's decision to enforce its contract rights is not considered an act of 'bad faith.'" Id. at 320. Well Fargo's inefficiency, incompetence, or disregard for its customers and the public notwithstanding, Wells Fargo was under no obligation to approve the Schwartzwalds' short sale request. There is no indication that Wells Fargo led the Schwartzwalds to believe that they were not required to make mortgage payments while their request for approval of the short sale was pending. And, to the extent that Wells Fargo told the Schwartzwalds not to worry about the foreclosure action that had been filed, any prejudice that might have resulted from those statements was negated by the trial court's granting of the Schwartzwalds' motion to file an answer out of time.”
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Bottom line folks is that you, as the borrower, have the obligation to make payments. Once you breach that obligation the lender/investor/servicer or whatever (regardless of the propaganda the news media puts forth) has no duty to work with you. I have been saying this for years.
Des.
Decision rendered June 3, 2011:
Federal Home Loan Mortgage Corp. v. Schwartzwald 2011 Ohio 2681 (Ohio App., 2011):
“In her affidavit, Julie Schwartzwald stated that Wells Fargo encouraged the Schwartzwalds to pursue a short sale of their property. She asserted that, upon notification to Wells Fargo that they had a buyer, Wells Fargo acted in a dilatory manner in reviewing the Schwartzwalds' request for approval of their short sale and led them to believe that the short sale would be approved. The request for a short sale was denied in September 2009, more than 120 days after the request was made. Even accepting Mrs. Schwartzwald's allegations as true, we cannot conclude that Freddie Mac had unclean hands that would preclude this foreclosure action. Once the Schwartzwalds defaulted on their note and the balance was accelerated, the lender was entitled to pursue a foreclosure action against them. See Gaul v. Olympia Fitness Center, Inc. (1993), 88 Ohio App.3d 310, 315. "A lender's decision to enforce its contract rights is not considered an act of 'bad faith.'" Id. at 320. Well Fargo's inefficiency, incompetence, or disregard for its customers and the public notwithstanding, Wells Fargo was under no obligation to approve the Schwartzwalds' short sale request. There is no indication that Wells Fargo led the Schwartzwalds to believe that they were not required to make mortgage payments while their request for approval of the short sale was pending. And, to the extent that Wells Fargo told the Schwartzwalds not to worry about the foreclosure action that had been filed, any prejudice that might have resulted from those statements was negated by the trial court's granting of the Schwartzwalds' motion to file an answer out of time.”
_______________________
Bottom line folks is that you, as the borrower, have the obligation to make payments. Once you breach that obligation the lender/investor/servicer or whatever (regardless of the propaganda the news media puts forth) has no duty to work with you. I have been saying this for years.
Des.
Bankruptcy Wizard
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