I have a friend/client that would like to do a short sale. However, this client has strong income. He can certainly afford all of his monthly payments. He owns two lots that are upside down by about 70% and would like out. Is it possible to work him a better deal like splitting the deficeincy with the bank or a long term promissory note at a low rate? Is this worth pursuing or is it a waste of time? Any feedback would be greatly appreciated.

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You are absolutely right Joseph. The key words here are IF you owe MORE than what it is worth then yes you probably in most cases can do a short sale. The issue is that there are quite a few unprofessional agents out there doing short sales that should not be. For example, equity skimming is illegal. If you are trying to short two mortgages when you know that the first can absolutely be paid off instead and just do a short on the second then you are unprofessional and making the rest of us look bad that are doing what is right. Obviously there had to be a real reason for his client to want to short back in 2009 or he would not have taken that hit to his credit if the seller was properly notified of the risk. There are so many different situations but I have NEVER heard of anyone selling and taking the short without any reason at all.

Brenda, I LVOE LOVE LOVE your "spiritied" response!!!

 

;-)

 

If you look at this from a financial stand point (and do some research), you will see that CITI, and Wells fargo as I recall, have also done this THEMSELVES on business propeties they owned (I actually think CITI just handed over 5 office buildings they owned if I remember correctly?

 

I am not here to judge "morals", BUT, the bank clearly knew the risk much like the homeonwer.....from a financial stand point, it makes perfect sense to get out from under a bad investment......Seller did not make the "loopholes", but, DID admittedly take advantage of the options available to him/her......

 

My job is to look out for the homeowner, and, do what is in THEIR best interest...having gone through this myself (it is how I got into the business 7 years ago), i feel NO SYMPATHY WHATSOEVER for any bank at this point.

 

Knowing how the process works, how the odds are stacked against EVERY homeowoner from day one, how banks BLEED their investors for Servicing fees, etc., I again can feel no sympathy for the bank, and, persoanlly would not jduge ANYONE doing what they think is best for their family.

 

I am certain you ahve heard about the recent "robo-sgining" and other settlemetns, again, I get your "point", BUT, it is hard to feel even remotely sorry for the banks......

 

just my 2 cents, and yes I am admittedly "tainted" having delat with HUDNREDS of clients all over the country, most with the same story.......nightmares about dealing with banks

 

(I would even venture to say if short sales were not such a MONSTER game and headache, this SSS might have never been developed!!!!)

 

All my best to you, and, everyone here

 

 

 

 

I agree with Joseph. NO ONE knows what the bank will say. Go for it, especially if your brokerage doesn't charge a boatload of fees for taking listings, what have you got to lose? Probably nothing. And everything to gain not only from your payday but to making your client super happy.

As some of the more astute agents have already mentioned, yes you can still do a "short sale" despite not having a "traditional" hardship. We, as realtors are facilitators of the transaction. The public is not hiring us for our "moral" or "ethical" opinions but our technical experties in presenting the offer to the bank.

Strategic default is only a dirty word when this whole fiasco started - now you have Bank of Amereica touting their cooperative short sale and other banks realizing that its better to get these underwater properties off the books - people have to move for a variety of reasons, job change, death, divorce, outgrowing current home, etc. so our opinions on whether something is a hardship is just an opinnion unless you personally own the bank or the note.

I have gotten 3 deals based on my view on what our job in the short sale process is due to the opinion of a fellow realtor who wanted the potential seller to "bite the bullet" and continue paying on a home because they thought it was not a "hardship". So continue having that opinion and moral outrage while I will service those sellers and earn my commission presenting offers to the bank so the bank can make a financial decision.

I just attended a meeting where both Chase and Wells Fargo representatives said NO HARDSHIP - NO SHORT SALE.  They were playing hard ball as they stated "Being under water does not represent a hardship"  However, several agents who also spoke at the meeting said that they get short sales with no hardship approved all the time....  Sounds like the banks say one thing but do something else.  One thing that came out loud and clear is that it depends on who actually owns the loan - who are the investors.  This came into play when the banks reps were  asked "Do you have to be behind in payments" response was ...it depends.  Wells Fargo rep said their figure is just 31%  PITI / income for hardship.

My guess: you can try. But if you evidence that your Seller can afford the payments you may be shooting yourself in the foot

. Just because the property is worth less now doesn't absolve the Seller of the contract he signed to pay back the loan.

The bank's arguement is that in 2004 when values were skyrocketing, never did a Seller come to the bank and offer them a percentage for allowing the Seller to profit. Hardships are the only reason for short sales to be granted

 in my experience.

Jeff, 

    Actually there are only 2 reasons any lender will approve a short sale. And a Hardship is only one. Of course there are variations on the reasons but they boil down to 2 solid core reasons they will approve a short sale.  And please people do not email me and call me. Ask any attorney and I'm sure they will tell you. 

Don't get me wrong I turn down more short sale listings than I take. So, it still does not mean that everyone qualifies for a short sale. 

Oh how I love a spirited debate!  Obviously, everyone is entitled to and has their own opinion.  If you look at it from the "what have you got to lose" perspective and list everything without pre-qualifying the hardship, you have agreed to waste your income-producing time, in my humble opinion, on a bad gamble, when you could spend it on a better proposition.  I hear you, though, and I suppose there is an argument to be made for the "shotgun" theory of listing residential real estate, but it just doesn't work for me.  I've learned that it isn't just a client who interviews me but that I am interviewing a client, as well.  I've learned that red flags are red and not orange and that following my instincts, as opposed to not following them, is a good idea.  Desperation is never, again in my opinion, a good motivating ingredient when making a business decision.  I'm not implying that listing anything and everything comes from an attitude of desperation but, for me, it sure sounds like it might and it would not feel good to me and I don't want to ever have to feel like I have not had the courage to stand behind my convictions.

I don't feel sorry for the banks and investors, either.  I am not feeling sorry for anyone, actually.  I have skills and experience which I use to earn a living.  Period.  If short sales went away and long sales became the market, I would work to become a long sale expert.  Whatever it is.  Emotion and feelings just aren't part of it.  Empathy, yes.  Sympathy, yes.  For people and not institutions or groups of investors.  I feel badly for everyone who has to suffer because greed, at some point, outweighed the conscience of men.  This isn't the first time this has happened and I feel fairly certain it won't be the last nor is it unique in any way, shape, form or fashion.

 

My point for the gentleman wanting to find out if he would be able to qualify for a hardship sale without a hardship is that there are other and better choices to be made, more than likely.  It just sounds like a dishonest approach to me and I would be concerned with being associated with anything that is not, shall we say, above board?  Yes, find out if there is a real hardship and the seller is just being "proud."  There are conversations to be had that will get to that, if it is there.

 

Please remember, the most valuable thing you have is your reputation, when it comes to business.  What do you want yours to be? 

 

Enjoyed this immensely.

 

Signed,

Old-Fashioned

   I think we all have to remember one thing when dealing with short sale clients. There are 2 types, those with some sort of a hardship now on up coming. And then we have the people where it has become a business decision to get out. Hopefully we are able to help both before they decide to just walk away. 

   Has anyone else helped a client that was a victim of Predatory Lending? That's a fun one. Have you had one where the mortgage was done in 2007 when lenders we putting on M/I on everything, without the seller knowing, because the lender paid for it. It won't come up til the end, phase 3 of the short sale file. Surprise. 

   I have always said we need a little red book (probably the size of the bible by now) that says how EVERY lender does short sales, and every lender would have to do them the same way and abide by the book, so we all know when they are not compiling.  I won't be holding my breath.

Nite all

Last I will write on this (it really is a waste of time), but, I am having trouble letting Brenda's last comment go:

"....reputation, what do you want yours to be"?


Brenda, I can appreicate your "moral" point, but, and, am sure you have a great reputation, but, would LOVE to hear how you "pre-judge" and "pre-qualfiy" homeonwers, and, mroe interestingly, what you tell your potential sellers:

"....Sorry Mr. Homeowner, I will not help you b/c I think you can afford to pay your mortgage....I think you should sell your Mercedes, quit your country club membership, pull your kids from private school, etc. and pay back that loan with your hard eared money...."


1 - MAYBE you have heard of Morgan Stanley, in 2010 they "walked away" from 5 office buildings:
http://www.msnbc.msn.com/id/21134540/vp=35087620&#35087620
Could they "afford" to pay, certainly, but, not a good financial decision.....

and I LOVE this guy's stuff

2 - ".....what type of business would be considered less moral than a bank? I think I’d feel more morally obligated to a drug king pin than a bank."

http://mandelman.ml-implode.com/2010/01/strategic-default-is-a-mora...

And you can bet there are 1000's of articeles like this along with tens of thousands of homeowners that have taken it in teh shorts from banks.


Again, I am not hear to judge, only to educate, and, help EVERY homeonwer I can get through this nasty time, and, battle what goes on at the banks.

This is my last post on this (again, it is taking up my valuable time, and, much like talking politics or religion, I do not think anyone will be "swayed" one way or the other here).

All my best to everyone.....keep fighting for your homeowners.

Ben, I did not say that I  "pre-judge" anyone.  Yes, I do "pre-qualify clients."  It is a business decision not to waste time on what I feel (didn't say "know") could be a waste of income-producing time that could be spent on a more qualified seller.  I'm not "judging" as you say.  I am merely using certain criteria to make a determination as to whether or not the job is worth taking on, from a business standpoint, not a moral one.  Don't you pre-qualify Sellers by determining the market value of their property, calclulating estimated closing costs and the balance of their mortgage to determine their possible net sale proceeds, if any?  This isn't any different from that.

 

My opinion should not be confused with passing judgment.  I would never tell anyone how to handle their financial situation, regardless.  I do find the Mercedes, country club membership and hard-earned money analogy an interesting choice of example.  Be that as it may, those are very personal and individual decisions.

I think (this is just my opinion!) that listing a property as a short sale and taking it to the bank for approval when there are more non-qualifying than qualifying criteria that have been met by the Seller/Borrower would be the same as trying to win a gunfight with a knife. 

Finally, when I speak of reputation, I am referring to more than just morality.  I am referring to reputation as a business person who has an established track record of getting the job done.  I just don't feel that taking on business that has a greater chance of ending up in foreclosure than being a successful transaction lends itself toward supporting my credibility.

 

 

wow, just took the time to update an old question that was showing up on page 1 of Google and things got cooking.  We are all professionals just trying to help our clients.  That really is the bottom line.  When we help anyone get out of a bad situation by executing a short sale, it makes us happy and it is the right thing to do.  There is no dishonesty or unethical behavior, we just give the bank the info they require and work hard to help our client.  If the bank decides to do a work out;  well that is ultimately their decision.

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