No More Promissory Notes
As a HeadsUp:
I had a discussion this afternoon with one of SunTrust's more senior negotiators as the result of a fiasco with a short sale that we got escalated to her. Without getting into all the gory details of our situation, this individual informed me that SunTrust recently concluded that they were no longer going to give borrowers the option of a promissory note. If they want money, they'll be looking for cash.
A paraphrased quote: "I never understood this whole thing about giving people who aren't paying you the option of an unsecured note to pay you. It never made sense to me."
I don't know if anyone else has heard this or not but, we did have a significant promissory note on the table for this client and it was removed from any future discussions and replaced with a large cash payment - take it or leave it.
Replies to This Discussion
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Permalink Reply by Greg Johnson on
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So how much did your client have to pay back and what was his principal balance? Was the cash less than painful than the prom note?
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Permalink Reply by Steve Early on
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The original proposal they gave us was for $25,000 cash and a $30,000 prom note. This went into a separate quality control path because of the amount of debt that would have to be forgiven. They came back with $25,000 cash and a $150,000 prom note, or any other combination of cash and a note that equaled $175,000. However, when you calculated the monthly payments multiplied by the number of months, they would have ended up paying $198,000 in the prom note, not $150,000. Pretty steep interest. So the client said they would do this, but wanted the note at 0% interest. Two months later, no decision we escalated with a letter asking them to just making a decision.
This is when we were informed they would no longer do promissory notes. We were informed that if the client wanted to come up with $100,000 in cash they would take the deal to the top level in the management review cycle to see if it could get approved.
So is it less money overall? Yes. But certainly not less painful. The only place these people have to get their hands on that much cash is to raid their 401K and this will take up more than half of it.They're trying to decide if they just want to throw up their hands and file BK or take the deal. Their attorney has recommended filing BK, but the husband is fearful that this could impact his employment, so he is reluctant to go that route.
When I mentioned that the only place they could get it was out of their 401K, the senior negotiator at SunTrust stated that she really didn't care where it came from. They could borrow it from friends, take it out of the bank or wherever, but they wanted $100,000 ... that's if the top level will go along with that figure.
As of May 6th, it will have been a year since we filed our authorization to speak to SunTrust, and we are on our third buyer.
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