[Question: Do you mean that it started out as a short sale, and then the property went into foreclosure? Was it because the bank rejected the short sale price and foreclosed on the homes, so the sellers (if you can call them that!) had to declare bankruptcy instead of avoiding it with a short sale? ]
Scenario: one house bought for $310k in 2007 now worth $110k, owner out of work. second house bought for $270k in 2006 now worth $135k with seller out of work. Both shortsales start in Nov. 2009, I get buyers. Bank proceeds to piddle around for months in both cases, going through multiple mitigators. The first house we go through three buyers (two cash) the last one has an offer of $106 but the bank wants $112 and just last week calls it off (paying tenant $2,000 key money to leave). The second house has a buyer offer of 140k but the bank wants $150k plus a $20k note from the unemployed owner or $170k. The bank just up and auctions it without telling us though we are trying to restart the proceedings.
Here’s the kicker. On the first house the original cash offer was $112k, but now when they go to auction the will get $95k minus $2k to renter minus 8 months of lost rent or about another $10k. They are operating out of spite.
Even better, the second house is auctioned for about $120k though they have in hand a $140k offer. They also lose $12k in lost rent.
The whole system is corrupt and being bailed out by you and me.
Thanks for your answer. Very informative!