5th 3rd prefers ZERO dollars over $4,500 in a short sale now. Any suggestions?

By
Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

I have not run into such a brick wall in the hundreds of liens I have negotiated.

My client is doing a short sale on an investment property. Sales price is $175,000. The first mortgage, Citi, is taking a short sale and allocating $4,500 towards the second mortgage, which is 5th 3rd.

5th 3rd wants the entire remaining balance of $40,000 to be repaid by the seller. 5th 3rd wants the seller’s current 2nd mortgage on the investment property to be transferred as a third mortgage on the seller’s personal residence. The seller may have maximum $5,000 to $10,000 equity in their personal residence, but not really if you factor in selling costs and closing costs.

5th 3rd demands, per some “policy”, to have the seller encumber his personal residence up to 140% of its value.

5th 3rd also disregards the seller’s financial statement. The financial statement shows about $2,000 monthly negative including the loans that are included in the short sale. After the short sale, the seller will be barely making ends meet.

5th 3rd claims that according to his credit report he has $2,000 of discretionary income, even though the CREDIT REPORT DOES NOT REFLECT most of his expenses such as groceries, baby expenses (two babies), utilities and most of the expenses needed to run a household. 5th 3rd is plucking numbers out of air and is unwilling to explain their math.

The sellers refuse to jeopardize their personal residence and the roof over their babies’ head and are ready to pull the trigger on a chapter 7 bankruptcy to shake loose of the problem. They have spoken to a BK attorney who confirmed their chapter 7 eligibility. The BK attorney has sent a letter to 5th 3rd clarifying the situation.

5th 3rd also states they would rather get ZERO dollars in a foreclosure and bankruptcy rather than $4,500 now! Does 5th 3rd get reimbursed more by TARP or other source if they get ZERO from the seller?

We have appealed and escalated to a manager, but 5th 3rd’s answer always comes back the same: FIRM DENIAL.

We now want to escalate as high as we can. Does the group have any experience, suggestions or contact info within 5th 3rd?

Any help would be greatly appreciated.

We are trying to help a hard working American family AND Fifth Third Bank.

Posted by

 

 

Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East

Website David.DavidHalpernRealtor.com

(502) 664-7827

 

 

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Topic:
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Legal Aspects of Short Sales, Foreclosures, Loan Mods
Tags:
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5th 3rd

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Rainmaker
1,143,921
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

You nailed it. Fifth third reduces exposure for litigation as well as increases its bank revenue by letting it go into a foreclosure and disposing of the property through that channel. They are also accurate in wanting to assess his current O/O residence for the debt he wants to walk away from.

He really needs someone in his community that is a real estate attorney to give him advice of other issues that may stem from his potential losing of the property. The only thing worse than loss is loss that doesnt fully go away

Also - so you dont go into this again, when its a primary residence you are going to get much more leeway working a short sale than on an investment property. The investment loss does not impact the borrowers lifestyle as it would be if they had to move (selling thier primary O/O home) and go from owner to renter. They are in the right and that move does not surprise me no matter how mad it mad you.

 

Sorry about this

Jul 15, 2011 11:23 AM #1
Rainer
295,383
Paddy Deighan JD PhD
TimeshareLawyers.pro - Vail, CO
Paddy Deighan J.D. Ph.D

this is hard to imagine..there must be something going on behind the scdenes at 5th 3rd...stories like this have no plausible explanation

Jul 15, 2011 01:35 PM #2
Ambassador
1,508,482
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

Sorry I can't help you since I don't do short sales.  I am sending positive vibes your way so that you can figure it out :)

Jul 17, 2011 12:51 PM #3
Rainmaker
508,942
C. Lloyd McKenzie
Albuquerque, NM
Living Albuquerque

Wow! this is very intereting case studies.  Now I wonder what kind of business structure is his business?  To my understanding, short sales were geared towards homeowner who are occupying thier home of residence. Investment Properties were not eligible.  After all, in business, losses are the result of decision made by business owners.  It is a part of doing business.  

 

Jul 17, 2011 05:18 PM #4
Rainmaker
525,189
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

US Mortgages #1 - Thanks for the input

Paddy #2 - Something in the system is self-defeating. I'm trying to find someone in 5/3 who will let common sense prevail.

Renee #3 - LOL! Thanks for the positive vibes!

C Lloyd #4 - Some gov't short sale programs are geared toward helping owner occupants. However, in this case the lender will lose less if they compromise.

Jul 18, 2011 12:43 AM #5
Rainmaker
637,761
Don Sabinske
Don Sabinske, Sabinske & Associates Inc. - Zimmerman, MN
Sabinske & Associates Inc.

US Mortgages is right on the money.  Sorry for the pun.  But, those are the reasons, and I have run into this before.  They will make it impossible without a foreclosure.  I can just about GUARANTEE it.

Jul 19, 2011 03:12 PM #6
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Rainmaker
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Dave Halpern

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