Special offer

To Pay or Not To Pay that is the Question

By
Real Estate Agent with EWM
There is no question that the Real Estate industry is pretty hectic these days.  An article in the Wall Street Journal illustrates one problem in particular that Homeowners are currently facing.  Some homeowners are finding that they owe more money than their homes are actually worth.  As you can imagine this poses a serious problem.  How can someone in this situation turn things around for the better?  Sharon Cooper, of Lynn Massachusetts, was placed in this same predicament.  Her solution was to ask her lender to allow a "short sale"-the selling of a property for less than the due amount, and the disregarding of what is still owed.  She felt by using this method she could avoid foreclosure.  Her lender claimed they could not assist her unless she fell two months behind on her payments.  What kind of advice is that?  Her lender claims they never made any such statement, but that they are significantly more considerate towards borrowers whom have fallen behind on payments.  Even if they are not blatantly telling people to stop paying their mortgages, through their actions they are encouraging it.  This problem is stretching across the US, according to Credit Counselors.  For more information on this fascinating topic check out the full length article at Homeowners Run Into Double Squeeze.   

Comments (3)

Ron Parise
LocateHomes.com - Cape Coral, FL

That advise is typical.....and correct

The lender will not approve a short sale if the borrower has sufficient income to pay their mortgage or if they have other assets sufficient to cover any shortfall  If the borrowers loan is current she has demonstrated the ability to pay and there will be no short sale approved. Falling behind on your payments is not the only evidence needed to qualify for a short sale, but it is probably necessarry

Also consider that if the debt is forgiven than the borrower  will get a 1099 for the shortfall and unless they are insolvant will owe the IRS.

Nov 06, 2007 06:47 AM
Vincent McKamy
Samson Properties - Fredericksburg, VA
Realtor Fredericksburg Virginia

Adriana,

I thought I would never say this but, I kind believe the bank has a point.  If they allow your friend to sell her house short or for a loss to the bank and allow her to go on her marry way, what is preventing her from going down the street and buying another house the next day?  So if they have you miss a few payments, they can note this on your friends credit report and prevent her from going out and buying that next house.  I'm actually getting tried of hearing about homeowners that bought to much house and can't make the payments now so they want an easy out.  I don't want to be mean but, people like your friend maybe shouldn't own a house for a while.  If we keep bailing them out what is preventing them from doing it again and again.  One last thing by letting all these people take the easy road out of their troubles kinds of belittles all the homeowners out there that saved for their homes and that are making their payments day in and day out. 

I wish your friend the best luck.

 

 

Nov 06, 2007 06:54 AM
Aventura | Bal Harbour | Sunny Isles Beach | REALTOR® 786-229-7999
SIB REALTY, Llc // WaterWayRealty.com - Sunny Isles, FL

Lenders usually are looking for a real and actual "hardship". I've seen where some lenders want to see utility services disconnected too. If banks and/or lenders welcomed short-sales, probably 70% or more mortgagors would get in line!

short-sale applicants waiting in line!

Nov 06, 2007 07:05 AM