Working With Short Sales

I’ll wrap up this short sale topic with this posting, as all I’m trying to accomplish is let people know what’s happening in today’s market.

After many days of phone calls to two lenders and the property owner, I came to these conclusions…
The property was originally priced by 33% over current market prices. (That’s unacceptable).
The company managing the first mortgage loan (the first lean holder) was easy to communicate with. This loan has been slated for foreclosure, with the foreclosure date unknown. They were unaware that a second lean encumbered this property.
The second lean holder, a nationally known bank that had provided a home equity loan was extremely difficult to contact. The representative of this lender who I finally was able to speak to was unaware of the first mortgage lean (That’s unacceptable). This bank representative stated that unless they received 70% of the debt from sale, they would not approve the HUD1, making it impossible to close on this property. This lender will never realize a 70% recovery. They will be fortunate if they realize a 5% recovery of debt.

Having devoted several hours of work on this property, I informed the property owner that I would not list a property that will not close.

I suggested, for a second time, The property owner visit the US Department of Housing and Urban Development (HUD) website http://www.hud.gov/foreclosure/ and refer to their on-line assistance. I also suggested speaking to an attorney, and perhaps discussing filing bankruptcy.

The unfortunate part is, most of this could have been avoided.
Even if the property owner could not afford an attorney at this time, had the property owner of this rental property not turned his back on these debts, had the property owner contacted HUD and sought their assistance, and had the property owner used prudence in retaining a real estate professional, this house may have already been sold, and the owner released from the debts tied to this property.

Lenders are currently overwhelmed with faltering mortgage loans. Banks do not want to own properties. You can’t wait 6 months and then expect to easily avoid a pending foreclosure. It’s an involved process. Once your loan reaches the lender’s loss mitigation attorneys, things get even more complicated for the property owner, and anyone else involved.

If you are in a financial real estate bind, there are avenues you can pursue to resolve the debt. Doing nothing until the last minute isn’t one of them.

Questions? (I can't guarantee an immediate reply)