Hardship is in the Eye of the Beholder

Real Estate Agent with The Boulevard Company SC 66445

Since January I've been working with a client on getting his house sold. It's a short sale. I know those are bad words for a lot of folks, so I apologize for hurting tender eyes by using them. But it is what it is.

My guy bought his house with his wife when they had two incomes, he was younger, and she was alive. While his wife was sick with cancer, my client had to retire from his job to take care of her. His income nearly cut in half when he did that. He refinanced his house to help pay her medical bills while she was sick. After she died, she left a heap of bills he had to pay - the company she had leased her car from demanded he pay the remaining balance on her lease contract!

Now his health is deteriorating so that he can't maintain the 3500 square foot house, he's down to one income, and the bills keep coming in. We got an offer on his house at full list price and submitted it to his bank with his hardship letter, income info, etc. His income information shows he's about $200 short from being able to pay his bills each month. The bank has reviewed the file and determined he is selling "by choice" and that they will require him to take a note back after closing for the balance of the loan, which will be roughly $126,000.

I am shocked and amazed at the same time on this one. If the man is unable to make ends meet because of circumstances that happened after his purchase and refinance, how is that not considered a hardship?

Unfortunately, my client is going to give up, move out and let the bank have the house if this short sale doesn't go through... and each day it's looking more and more like it won't. The bank will likely slap him with a huge judgement after the fact, and they will likely put the house on the market and not get a penny more than we've got on the table now. In this case, NOBODY will win. What a tragedy.

Posted by

Stephanie Davis REALTOR® ABR, GRI, SFR
© Carolina One Real Estate


Serving Goose Creek and the Greater Charleston, SC area


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Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

Banks have not figured out a good way to deal with Short salkes. It is because someone actually has to think and there is no formula they have devised yet to make this a non thinking process.

May 20, 2009 12:46 AM #1
Harry F. D'Elia
Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

Thanks for sharing this tragic story with AR. There are many more stories such as yours around America. How is the IRS going to collect all the 1099s for thousands of dollars when these people have no money in the first place.

May 20, 2009 12:49 AM #2
Edith Schreiber
Luxury Homes, Move Up Buyers, 1st Time Homebuyers, New Construction - Frisco, TX
Dallas Area Real Estate


What a tragic story.....and so heartbreaking.

Some of these banks just don't GET IT!!! It's truly amazing - I hope you will update us as things continue.

I would be willing to bet that your prediction comes true and that the property will come back on the market after foreclosure and, besides wasting alot of time, it will end up selling for not much more than what they would net at this point.

What exactly IS the definition of a hardship, in the eyes of this all-knowing bank???? What a joke.

Edith Schreiber - Dallas, Texas

May 20, 2009 12:56 AM #3
Ed McNamara
Bean & Dunn Real Estate - Oklahoma City, OK

You should recommend your client speak to a real estat attorney.  The "rules" have changed and a sharp attorney may be able to save this deal.  Most attorneys do not charge to see if there is a case.  These deals can be very frustrating - in most cases you're talking to a hourly wage person who does not fully understand the actual cost to the bank to go through the foreclosure process.

May 20, 2009 01:05 AM #4
Stephanie Davis
The Boulevard Company - Charleston, SC
Broker Associate and REALTOR®

Charlie - No formula and no rhyme or reason.

Harry - Bingo

Edith and Bean - This is a tragic story. We have had a real estate attorney involved since before I listed the property. I wanted them to counsel my client on his risks and rewards in attempting a short sale. Today we met again with the short sale specialist at the attorney's office and again rehashed the income and expenditures of my client, we reviewed the deterioration of his health, and we again looked at the market and the improbability of the bank being able to get more for the property. Rigth now it looks as though the bank likes the buyer we have and has accepted the short sale; the problem is with them expecting my client to bear all the weight of the declining market on his own. He's had this mortgage for three years. When he took the note the principal balance was $370,000. NOW THE BALANCE IS MORE THAN $390,000! They set up the loan so that he will NEVER have it paid off and they are wanting now to make him pay the difference between their net from this short sale and the inflated balance of his mortgage. This just keeps getting better!!

May 20, 2009 09:00 AM #5
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Stephanie Davis

Broker Associate and REALTOR®
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