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Florida condo highlights short sale, foreclosure, complications

When it comes to being in default on mortgage payments, not only is there the fear of possibly losing the home to foreclosure, but the entire process to try and hold on to that home can be quite frustrating and complicated. In fact, the complications that have cropped up in the past are even more proof of just how dysfunctional the current mortgage market is in the U.S.

Take for example one woman who found herself really in a mess of confusion between the servicer and the investor on her Deltona, Florida, condominium.

It all went back to 2007 when she bought the home as an investment. At the time she put down 20 percent on the $250,000 condo. Countrywide, which was later sold to Fannie Mae, was the mortgage holder. However, when financial times got tough, she found she could no longer find people to rent the property. In 2009 the servicer, Bank of America, filed for foreclosure on the condo.

She had tried for a loan modification, but was not eligible. Next up she asked the Bank of America to let her make a short sale on the property. This is when the property is sold for an amount that is less than what is still owed. Initially, the bank agreed, stating Fannie Mae accepted the pay off amount.

However, it wasn't until after she sold the home, forfeited the down payment and paid the bank $1,000 that she learned the short sale was denied. Of course, this put the woman in a tough position as new owners had already moved in and she was under the impression that the first terms she was presented -- which included her debt being settled -- were final. Now, she was being told the sale might be approved if she could either get more money for the home or accept some of the responsibility for the difference.

Luckily for the woman, after much back and forth, the Bank of America agreed to settle the entire issue and go with the original terms of the short sale. However, her story still provides a valuable lesson to any Florida homeowner who is looking at options to avoid foreclosure.

The bottom line is that with the crash of the market, the mortgage market has gotten quite complicated to navigate. This is why it's a good idea to talk with an attorney before making any decisions on what steps to take next.

Source: The New York Times, "A Condo Was Sold, Until It Wasn't," Gretchen Morgenson, Sept. 15, 2012

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