No matter whether you're buying, selling or facing foreclosure, there's a huge value in keeping detailed records of the process.
Dates and details of conversations. Notes and observations. Shipping receipts and faxing records for documents. Anything and everything.
"You need to be your own best advocate 24-7," Freddie Mac spokesman Brad German told me Friday.
Because real estate broker Jim Hildreth of Sonora kept such detailed records, a short-sale deal derailed by a sudden foreclosure last week is back on track.
Here's what happened:
Hildreth's client, Javier Mendoza Cortes of Sonora, bought a home on Countrywood Court for $390,000 in 2005. Working two jobs as a nurse -- at a local hospital and as a private home-care provider -- Cortes said he was able to make his mortgage payments. Then his mother fell ill, and he fell behind because he was paying her medical expenses. Bank of America, which held first and second mortgages on the home, planned to foreclose. Cortes moved out of the home Aug. 30, 2009.
About that time he met Hildreth, who suggested they try a short sale on the home in an effort to prevent Cortes from having a foreclosure on his financial record.
They found a buyer, a doctor from Sonora willing to pay $232,000 on the first mortgage and $3,000 on the second. Though it took 11 months, the bank, buyer and seller settled on the terms and signed documents. It was scheduled to close Wednesday, with the money to be wired the next morning, thus avoiding the foreclosure and the risk of the home selling for even less at public auction.
It seemed to be, in this convoluted and perilous era of home finance, a way to salvage something from another failed mortgage. The deal seemed ready to go two days ahead of the projected July 14 closing date.
Not so fast, though.
A representative of Bank of America called Hildreth on Tuesday afternoon, telling him the government-sponsored Federal Home Loan Mortgage Corp. (Freddie Mac), which technically holds the note, would foreclose if escrow wasn't closed and the money wasn't wired to the East Coast by 3 p.m. that day.
The problem? Federal law requires wire transfers to be completed by 1:30 p.m. Pacific time. Hildreth didn't get the call until after that deadline had passed. He protested to the bank official, who, he said, told him it was beyond her control.
The next morning, Freddie Mac proceeded with the foreclosure and put the house up for auction on the Tuolumne County Courthouse steps at a minimum bid of $232,000 -- $3,000 less than the deal Hildreth had arranged.
When he tried to delay the auction with a cease-and-desist order, a Freddie Mac official contacted by phone told the so-called crier to ignore it and proceed with the auction.
They found no takers at that price, which, as you'll see, turned out to be a blessing.
Hildreth, predictably, was livid. He fired off letters to everyone involved, wondering why they would throw away a nearly complete, approved sale that would have been funded and closed at roughly the same time the auction took place.
"I tried to call Freddie Mac and was on hold for an hour," he said.
Friday, I was able to reach German at Freddie Mac and posed the same question to him. He had Freddie Mac staff research the case.
An hour or so later, he called back to explain what had occurred.
"For efficiency's sake, all of these things go through parallel tracks," German said.
He said it's common practice to monitor the short sale while proceeding with the foreclosure, in case the short sale falls apart, as so many do.
In researching this particular case, he said, "the bottom line is there was a glitch."
The better bottom line, as far as Hildreth, Cortez and the buyer are concerned, is that Freddie Mac is reconsidering its decision to foreclose.
"We're looking into it and will take the appropriate steps to get the short sale back on track," German said. "That's the goal."
The agency is fortunate no one bought the home at auction, which would have created another deal to negate. The only big winners would have been the attorneys jumping in to sort out the mess and score their cut.
L ike so many others who make their living in real estate, Hildreth has taken a financial pummeling in a market devastated by -- drum roll, please -- a horrible economy that's fostered foreclosures and short sales that in turn gutted most home values throughout the state and particularly in the valley and foothills.
And if the potential collapse of this deal wasn't enough, a commercial building he co-owns in Louisiana was torched last week. A disgruntled employee of one of the tenants is suspected. The fire caused about $200,000 in damage, he said.
"Because of the economy, I didn't have insurance on it," he said. "It's been a tough week."
So Freddie Mac's stated change of heart became the best news Hildreth had heard all week. Not only will Cortes avoid having a damaging foreclosure on his record, Hildreth should see the commission he was counting on to pay his own mortgage.
Friday afternoon, Hildreth said he received a call from a Bank of America official in Dallas who asked him if the deal had closed.
"I told him it went into foreclosure and explained to him what had happened," Hildreth said.
He said the official told him he had a stack of short-sale files 3 feet high on his desk, and now understands why bank higher-ups ordered him to make this particular case his immediate priority. He told Hildreth it might take a week or so to push the deal through, but that it will go through.
Hildreth, of course, made detailed notes of their conversation and stuffed them into the sale's ever thickening file.
A prudent move, indeed. Because until the money is transferred and the deed is recorded, you never know when they might come in handy.
Jeff Jardine's column appears Sundays, Tuesdays and Thursdays in Local News. He can be reached at email@example.com or 578-2383.