propert sold in forclosure while buyer is in escrow on short sale

This is more of a legal question especially when you refer to liability. However, my "opinion" is that the lender who held the mortgage has the right to sell the property especially if they went through the foreclosure process in the state the property resides. Short sales have been a challenge to finance and have caused a lot of frustration for home buyers. I will give you my latest experience with a short sale. My client came to me with a short sale approval from the bank on a home he was purchasing. We arranged financing very quickly. There was a first and a second mortgage existing on the property. Once we had final approval on our loan, we notified the parties. Keep in mind that we were within the short sale approval time frame and did not pass the expiration of the approval. Well. A week before closing, the second mortgage lender sold the servicing to another lender (more of a debt recovery lender). Ultimately we closed the loan, but it caused some unnecessary delays and negotiation with both the first and second lien holders.

For legal advice consul with an attorney. ... Happy funding, Rudi