I specialize in short sales and helping Sellers in hardship. It is a complicated thing we do when we help a seller with a short sale. The seller must own the decision to do a short sale and be confident that this is the best solution for their situation. As the short sale agent, you must be confident that the seller has researched and is knowledgeable about their alternatives and the consequences of their decisions.
You cannot give them legal advice although you can send them to reliable websites and advise them to seek legal and financial advice. You must see if a loan modification can work for them prior to doing the short sale.
The Banks have very different policies regarding loan modifications.
Well Fargo has a plan that offers a reduction of the loan principal balance by 20%; a low-interest only rate for 5-10 years based on the clients financial situation; and forgiveness of past due amounts. They do add a number of legal fees and the impound accounts on the back-end of the loan. What is the criteria that they use to determine who is eligible for this loan modification?
Saxon Mortgage will offer the client a reduced interest-only option but no principal reduction. In the current market here in Redding, California, that would not be helpful to the client. It is like asking them to take the guillotine rather than commit Hari Kari. We've lost over 50% in market value in the past four years. To remain in a home with a loan for $575,00 when the home is only worth $250,000 and make payments of $2000 a month would not be a wise decision.
While Well Fargo has offered a small number of clients the option to weather the storm and remain in their homes, what we really need to see is a wider application of this program. Each bank offers some type of loan modification under any number of names. Bank of America while saying they have a program to help the seller keep his home, when called and given the particulars we were advised that no program exists for our circumstances.
What makes up the criteria to make that determination. In the Saxon Mortgage case, why would Saxon not choose to keep the seller in the house when the short sale will produced the Buyer and a new loan of the $250,000 which is market value. Saxon saves money by keeping the seller in the home. HELLO! Is anybody out there doing the numbers? WHY would they choose to make a bad financial decision?
Bank of America has a choice to keep the current seller in the house at market value or take the additional loss of paying for the short sale with the same net result. The bank will have to pay closing costs and commissions and some legal fees to get the short sale done. Why does this not make sense? It is a losing proposition. If banks are all about the bottom line, well why are we having this discussion (sorry....rant).
I would love to have someone explain to me why such common sense does not prevail and why we live in this current surreal world when making simply choices could make the real estate industry whole again. Of course, that does not even touch on the real value of a new point of view and perspective by the banks on this better course of action. It's a good business decision and those people who recover from this current situation will remember who did good business.
It won't be Saxon Mortgage or Bank of America.
I am Jeanean Gendron, your Redding and Shasta County Specialist. You can reach me at 530 276-7417. I answer my phone. Visit our website and The Shasta Lifestyle blog to learn more about real estate and living here in Redding and Shasta County.
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