The foreclosure that never had to happen

This story takes place only about a year ago, when the pasture was green. There was no need to leave to go the neighbors where the grass looks greener, you had plenty and all you thought you would ever need. But, things were starting to change, the grass was getting browner and the signs were coming that things were about to change for the worse, and they did.

People were starting to see overtime at work being cut back. Lay offs started to happen and some families just couldn't handle the pressure of keeping a house on one income for very long. They knew it would be only a temporary situation, but they knew they needed to find another job before they could get back on their feet and go back to a normal way of life.

This person, like so many since, then called the bank and was calling to say they were in trouble. But if they could somehow work something out because this was only a temporary situation. Once they got a new job they would continue to pay as they had before. The banks in their greener pasture wisdom are telling people like this person that "We can't help you until you are already in default."

So, he did what he had to do, he took the late penalty that he didn't want to have incur and made his next payment late and then called back. The banks said there was nothing they could really do for him and that maybe he should just sell the property that they call home. Basically they wasted a few hours of this gentleman's time on the phone to only tell him they can't help. Then they proceed to call him every day asking when he is going to pay again.

He tried everything he could to work something out with this bank, but now it has been months. He has a new job and he wants to pay, but, he has no way of catching up on the past due amount and the bank still doesn't want to talk. They just want to know where their money is.

Now that this person's credit has been shot because of the advice from the bank to not pay, it has now left him unable to refinance as well. This leaves home owners very upset with banks, because they now realize they are on the verge of losing everything over a few months of bad luck.

When a person is in a situation like this, they do what they have to do to try to salvage their credit and then they call a Realtor to do a short sale on their home and at least get the bank most of their money back. Because the house next door sold for $20,000 less than he owes, he knows he can't get full price. But, he didn't have much time to play with the price, he had to price it to sell, so the bank wouldn't get it back in foreclosure.

The seller does the bank a favor, hires an agent, does all the necessities of keeping the house looking good so it sells quickly and they get an offer. The bank should be happy it is an offer for the full amount owed on the loan. But, there is a catch... The person wants to assume the mortgage and put $40,000 down. This would give the bank a win-win situation, all they would have to pay is the commissions and the taxes.

The banks in their infinite wisdom sit on an offer like this for 20-30 days before they even get an appraisal on the property and then a negotiator is assigned to the property. Every Friday the agents call the bank to find out an update status and are continually told that it is under review.

With time clicking away until auction date, both the buyer and the seller are getting pretty upset with greener pasture banker man. In my humble opinion, as they should! This continues until it is too late, the house goes to auction and everyone loses...Oh wait, except the bank which uses this as a tax write off and then gets bailout money on top of it.

The banks are claiming they are losing thousands to bad loan, but maybe it is more out of stupidity. Homes like this sell for $100,000-$150,000 less that they are being offered by qualified buyers, yet because of their lack of response and no knowledge what other departments are doing, they lose this money and blame us, the public, for their inefficiencies.  

Agents are leaving the business because they are spending thousands of dollars and thousands of hours trying to help you get the most from their sellers and a house that you won't help yourself on. So many agents won't even deal with short sales because of the way you respond to us and the public.

To Congress and the Senate, it is stories like this one that make people think the bailout program is a bad idea. They are throwing money away and then we have to bail them out because they were arrogant? Tell me where this is fair to the hard working tax payers?

There are thousands of stories like this everyday. Every situation is a little different, but with the same result. These banks, if they can learn to help home owners who are in temporary situations, they can get all their money, it may take a little longer, but who cares if you get all your money?

Todd Clark - broker
Kastings & Associates
Phone: (503)524-9494
Fax: (503)622-8739
Todd@IFoundYourNewHome.com
www.IFoundYourNewHome.com

 

 

This is a fictional story, but we hear ones like this everyday in the trenches, the public and congress need to let these banks know that we are not going to take it anymore and we aren't going to bail them out of the mess they got themselves in to.