How does this work if one bank starts a foreclosure then sells to another bank before foreclosure is complete?
June 15, 2010 by gtsay
Filed under Foreclosure Properties
Question by kelly2sxy: How does this work if one bank starts a foreclosure then sells to another bank before foreclosure is complete?
I have a mortgage with one bank and could not pay so the bank started foreclosure proceedings. The foreclosure is not completed yet so does the new bank have to start all over and file all over again?
Best answer:
Answer by Sally
Nope they just continue with the proceedings.
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Generally the new bank would “stand in the shoes” of the original bank. You should consider defending the foreclosure action or filing for bankruptcy protection to save your house. You are welcome to contact me for further details
This is what is called a service transfer and this happens all the time.
Depending on the servicer, Home Loan Servicing, Select Portfolio Servicing, Wells Fargo and Countrywide. Those are some of the big ones. Depending on how far the Foreclosure is in the process they will pick up where the prior servicer left off.
In other cases they may have the file closed and billed, so the new servicer can do a full audit and try to do some loss mitigation workout’s with the borrower to try and get them performing again, and get the person paying their mortgage again. If that fails then they will refer the file out to an attorney for foreclosure.
Again it all depends on where the loan is at in the foreclosure and what the file looks like upon transfer.
Now with all the HAMP letters going out from the current administrations there is a lot more loss mitigation work being done to get people to pay on their mortgages again.