Some Bank’s Short Sale Polices Seem To Be Falling Short In The East Bay!
December 26, 2007 by Jim Walberg · 6 Comments
Some homeowners who have great credit and can’t afford their home anymore are in trouble!
.
We have a customer who owns a home in the East Bay that has lost his job, he maximized a mortgage on his home purchase two years ago – which means he put as little down as possible. His lender – one of the country’s largest banks, was very cooperative in providing his current mortgage.
.
Our customer is a very hard working person, who has worked hard to meet all of his financial responsibilities. Because of his credit payment history he has great credit. We started a discussion with him several months ago regarding what alternatives he had regarding keeping his home after a sad turn of events in his life because of a downsizing company. Because of the price corrections the past two years his home will likely sell in today’s market $50,000 less than the mortgage owed.
.
During the past month of discussions with his lender we began to understand the alternatives that were available to him. What we discovered was very disturbing to us. Again, our client’s first objective is to do the right thing with the bank mortgage holder and to do all he can to protect his credit. As of today it appears the bank has no interest in doing either.
.
We have been dealing with the bank’s customer service office in the Mid-West. They do not know our customer and they don’t know the East Bay real estate market. All they know is they have a huge stack of foreclosures on each of their desks that they are dealing with more everyday. The current bank policy is to not deal with any homeowner regarding negotiating a short sale of their home until:
.
- The homeowner is at least three months behind in their mortgage payments.
- The homeowner will need to have been served the notice of foreclosure – the homeowner brings the three month’s of mortgage and interest payments current.
- The bank has delivered the eviction notice to the homeowner after the notice of foreclosure has been served.
- The homeowner has no other assets to bring their mortgage current or pay for any difference in the sale of their home.
.
Given this timetable our client’s best game plan with the bank would be to stop making all mortgage and property tax payments until the bank legal evicts him out of his current home. What a ridiculous game plan! The homeowner will ruin his credit, however he will be able to live in the home for seven or more months before he is required to vacate the home! The bank would probably get a higher price for the home today rather then what they will net months from now when they have a vacant home to sell. Plus, they will not have received any debt service on the home for months!?
.
Because of my disbelief in what I learned from this lender regarding our client’s situation, I called several of my contacts in local banks. I discovered that a consumer has a much better chance to work through mortgage problems with a local bank than a national one. The local banks understand the local needs and you are even able to meet face to face with a foreclosure counselor in many of them. We are beyond frustrated and our client is in disbelief that this is his only alternatives. We welcome any of your experiences with similar situations with foreclosures and short sales.
Related posts:
We are in a similar situation. We have excellent credit. Three years ago we bought an investment property in which we had planned on renting out. We were unable to rent it due to the saturated market of homes for sale that led to the saturated market of rentals. My husband became sick and was hospitalized and had a long recovery. He is paid on commission only so this set us back. At that point we decided to sell the home. We had it on the market for 2 1/2 years with no offers even though it was priced well below similar properties. My husband was hospitalized again and this time required surgery and an even longer recovery. We were really feeling the financial strain. We had to take out a home equity line on our homestead property to pay our bills on our primary residance as well as the investment property. In addition my husbands job has been extremely slow due to the current economy. We decided to short sale the investment property because of our lack of resources to pay our bills. The bank has told us that we do not qualify for a hardship beacause our credit is so good. We have tried to do the right thing and pay our bills but even our equity line is deminishing fast. We are now 90 days late on the investment property. They still will not agree to a short sale. They have told us to use the little equity line we have left and max out our credit cards to pay down the loan. We are living off of our equity line and can not afford another payment by maxing out our credit cards. We are struggling to keep our primary residence and take care of our two young children. If we do what the bank is trying to force us to do we will not be able to pay the bills on our primary property and take care of our children. We could become homeless! We actually have a solid offer on the property. The bank in the end would only loose about a net of 11% and they still will not agree to short sale. I do not understand. They will loose more in a foreclosure!
I am so sorry to hear about your situation. There is no comfort in knowing that you are among a very large crowd of people in this country that are having the same experience. There are lives being ruined because of how most of the banks are handling this crisis that much of which was created by unscrupulous lenders created. Our prayers with you and your family during this very difficult time. If there is any assistance I can be regarding a referral to professionals I know in your area I would be delighted to provide them for you. There is a rainbow waiting for you. It is just a very bad storm we are in the midst of.
Hi, yes my husband and I are located in California and our lender is based out of Texas. We are having the same trouble we refinanced our home over two years ago with a adjustable rate mortgage and told that if we did not make any late payments for the 1st 12 months of the mortgage they would refinance us out of the adjustable rate mortgage into a lower fixed rate without having to re-qualify. after 12 months they contacted us said that they would refinanced our loan, they said it would be 30 days and it would be fixed and lower rate. at the last min. 3 weeks into this they called and said they wanted to have the house apprised and i would have to pay up front and said they would refund us the fee at closing. When I asked why? she said “oh, we just are hoping that it comes back higher than when we last did the loan, than we can make your rate even lower.” I was told if it came in lower that they would use the previous appraisal. 10 days later I received a letter stating that our refinance had been denied due to the new apprised amount being to low. We continued to pay both the first and second for another year without any late payments. Now that our rate is ready to adjust they again contacted us stating that they would modify the loan, they said that the thing was that we could not have any late’s witch we did not ….then 3 months later when they did not respond after all the modification information was taken and we were told that we would here from them within two weeks . During all this my husband was transferred 200 miles away from our home and 6 children and now has to live out of town 5 days a week and is only home on weekends. (He has lived out of town for over a year now) I contacted the lender and asked when they would have any info on the modification, I was told that we had paid our 2ed 4 times 30 days late! This had never happened I paid by western union every month and had receipts to prove it. They refused to clear these late off his credit and now because those are on his credit we can not refinance our loan thru them or any other company, Nor are we able to move to where my husband has been transferred. This is taking toll on our family and we are desperate to do something so that we can live together. These lenders have no idea or they don’t care that they are not only destroying peoples credit they are breaking apart families. It’s all very sad.
B. Brockett
Dear Brigit, your story is being relived over and over again TODAY! With the salaries and bonuses of the heads of these banking institutions at a ridiculous level, I would expect the banks to start paying the consumers in order to make their payments! I feel so sad for your situation and I wish I had a magic wand to assist. There are many Realtors across the country that work hard each day to serve this sad moments in their clients lives and it almost at times seems like we are medics in a war zone. If you provide me your closest town I will see if I can find a Realtor to contact you and see if they can come up with some solutions. My best to you and your family.
Great work.
Thank you for your kind comment. Check in again!