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Permalink Reply by joe beauchamp on September 28, 2010 at 12:11pm

Generally, I don't have much of a problem if, as you say, the sellers cannot commit to the note. You either have a sleazy negotiator trying to gouge for as much as he can get (there seems to be a seminar going around on how to get as much out of a short sale as possible) or you likely have MI in there and they like money a lot.

If you have gone over your seller's financials and they make sense, you've looked at his bank statements, no $10K checks to bookies, he didn't just buy a new car, his credit report says he is slipping on payments elsewhere, you shouldn't have a problem convincing them that they can't expect money like that from the seller.

I ran into a team lead who should be in credit-collections. Lying, etc. Other than a situation like that, if the financials say this person is broke, they usually understand. I usually get them greatly reduced or they disappear altogether.

On the other hand, the seller cannot be charged with a deficiency, you say, so he should be happy to just let them foreclose since he gets nothing out of it one way or the other. Pointing that out would be good.

Is your sales price badly below BPO? The bank would generally rather foreclose than to a short sale because they've already put out most of the expense to get the person out of the house. If your numbers look like they are $25K better off to foreclose than do a short sale, you might be stuck.

So, the bank/MI/ripoff-negotiator sees cash flow in the financials, why then shouldn't he try to grab that? Your seller owes him a lot and he'd like it back. Now, if you are being honest on this and the seller really cannot afford that note, then straighten out whatever it is that makes the bank think that he has cash - unless it is a negotiator clone following the latest rah-rah-this-is-how-to-get-lots-of-seller-money, he will tell you why he thinks the seller can afford it. You have serious questions to ask. If you get "beats me" for an answer, go ahead, beat him - that doesn't cut it when the bank is choosing to get money out of a rock or hurt this seller's credit and life by demanding the impossible.