Is the bank holding the seller hostage?

By
Mortgage and Lending with Bank of Oregon a division of Willamette Valley Bank

Is the bank holding the seller hostage?

This one of the strangest things I've heard.  I have borrowers who put in an offer on a short sale months ago.  The seller accepted it and of course, it's been in the hands of the bank for months now.  I phoned my borrowers agent earlier this morning to see if he had any update to the offer being accepted by the bank.

Here's the hold up.  The bank is requiring the seller to sign a $15,000 Promissory Note, payable at closing.  How in the heck does the bank think the seller is going to come up with $15,000, at closing?  Naturally the sellers aren't going to net any proceeds since this is a short sale.  Why doesn't the bank just counter the offer to increase the sales price by $15,000.

This all just seems nuts to me.  If you've been involved in a similar situation, I'd love to hear how it got handled and resolved.

Have a great day!

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karen burket
promissory note at closing

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Rainmaker
498,333
Jim Patton
Aspire Home Real Estate 209-404-0816 - Modesto, CA
Realtor - Stanislaus ,Merced, San Joaquin Counties

If the sellers could pay the 15k they probably wouldn't need to short sell their home.  I had this happen on one of my short sale listings with BofA.  The home was only selling for 90k and BofA wanted my sellers to come up with 5k cash and sign a promissory note.  We countered both items out and BofA accepted.  Sometimes I think they just throw things out there to see if the seller will bite.

Jul 28, 2011 07:36 AM #1
Rainmaker
790,129
Carol Zingone
Berkshire Hathaway Home Services Florida Network Realty - Jacksonville Beach, FL
Global Realtor in Jax Beach, FL - ABR, CRS, CIPS

Karen - I would think the p-note option isn't required to be paid at closing, but rather over a period of time, and is something the seller probably could handle. As to the other perspective; the property may not appraise with the additional $15K on top.

Jul 28, 2011 07:40 AM #2
Rainer
143,002
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Exactly Jim!  "If" they had $15 grand, obviously they probably wouldn't need to short sell.  I've "heard" of something similar to this with regard to a 2nd, but there is only one lien on this property.   Glad your deal all worked out!  (oh, and I don't remember who the lender is on this one currently).  Thanks for your feedback...always appreciated!

Hi Carol!  Thanks for chiming in on this one.  Actually, the agent told me SPECIFICALLY that they were requiring it to be paid at closing.  Crazy stuff!  Good point about the appraisal too!  :-)  All the best to you! 

Jul 28, 2011 07:48 AM #3
Ambassador
1,726,157
Richard Weisser
Richard Weisser Realty - Newnan, GA
Richard Weisser Retired Real Estate Professional

I guess it all depends on the financials supplied by the seller. Perhaps they feel that the seller has the ability to pay something.

Jul 28, 2011 08:36 AM #4
Rainer
143,002
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Thanks, Richard!  That's an excellent point!  I appreciate you chiming in on this one.  Have a fantastic da!

Jul 28, 2011 08:51 AM #5
Rainmaker
724,201
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

Karen-It is really tough to understand why lenders do some of the things they do. Sometimes it may not be their policies exactly but the interpretation made by the employees who execute the policy. But they do come up with some head scratching decisions sometimes.

Jul 31, 2011 01:54 PM #6
Rainer
143,002
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Good morning, Wayne!  Thanks so mych for your visit and chiming in on this one.  This was definitely a noodle scratcher for sure!  Have a fantastic day! 

Aug 01, 2011 06:35 AM #7
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Rainer
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Karen Burket

Valley Mortgage Grou, Conventional, FHA, VA, mortgages
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