Admin

SHOULD I ADVISE MY CLIENT TO SIGN AN UNSECURED PROMISSORY NOTE WHEN THE LENDER ASKS ME TO?

By
Real Estate Agent with WEICHERT REALTORS/PROPERTY PARTNERS TREC# 0558222

Absolutely not!!  I am simply the messenger and will relay the request to my client but I WILL NOT ADVISE THEM TO SIGN IT as was suggested to me this last week by a lovely little negotiator with CW.  I won't advise them not to sign it, either.  I could not believe my ears!  She actually told me that if I WANTED TO GET PAID, I should be very positive with my clients and convince them to sign an unsecured promissory note for $6,000 since she thought they could afford it.  She also suggested that if I did not convince them to do it she would decline the sale even though her cost vs. benefit analysis on the file showed that the loss to CW to decline the sale would only be $300.  Now, they may be doin' some new math down there at CW but that sounds to me like um a pretty good deal for good old CW.  So, I relayed the request to my clients and they respectfully declined to sign a promissory note, I had them prepare and sign a letter stating that their current financial situation did not allow them to take on any additional debt and that one of the parties was almost certainly about to get laid off from their job and I had them provide me with an updated financial worksheet (i.e., expenses, income, debt, etc.) and submitted that to the lovely young lady at CW who had made the request. 

Her response to this submission was to counter the offer to the buyers for a full appraised value offer BECAUSE THEY WOULD NOT AGREE TO SIGN THE PROMISSORY NOTE!  The BUYER'S offer is $156K and the seller's lender's (CW) appraisal came in at $160K.  Are you with me here?  So, I called the buyer's agent and relayed the counter and he responded that his clients would want to stick with their offer. Soooo, I called the lovely young lady at CW and told her that the buyers did not want to meet her counter or counter at all, for that matter.  She informed me that, even though she has full delegation on the file (authorization to approve) she was going to turn it over to her manager.  I thanked her and that was that.  I really got the impression that was her last ditch effort at getting me to do something that was really rotten and unethical.  She obviously has not met me 'cause that ain't ever gonna happen.

This is the most perfect example of passive-aggressive debt collector mentality I have had to deal with to date and I have successfully sold over 50 homes under short sale circumstances in the last 3 years and have already doubled what I did last year in the first 2 months of this year.  It was almost humorous.  Almost. 

No, I am not worried that she will tank my deal.  I won't let that happen.  I will happily go over her head to get the deal done.  I've had to do it before and I will do it again.

To all the loss mitigation negotiators out there, I would like to say this.  There is absolutely no point in being passive/aggressive.  I am sorry you have such a crappy job but it is not mine or my client's fault.  You should not pass judgment on the people who are unable to make their mortgage payments.  I would venture a guess that some of you might even be in this position; however, if you haven't walked in their shoes, please, please, just do your job and leave the attitude out of it.  We are trying to do a job, just like you are, but I WILL NOT COMMIT EXTORTION in order to get paid, as this young lady suggested to me.  Actually, I felt like she was trying to EXTORT my cooperation in order to cause harm to my clients.  What was I supposed to do?  Did she want me to tell my clients that CW would not approve their short sale if they did not sign the promissory note when I know that is not true?  This is not my first rodeo and it sure won't be my last.  The numbers work and, last time I checked, that's what it takes to get the deal done.

Let me just say this LOUD AND CLEAR so that everyone interested in this particularly unsavory aspect of our job as short sale Realtors understands, I WILL NOT THREATEN AND THEREFORE TRY TO EXTORT MY CLIENTS FOR THE PURPOSES OF GETTING PAID A COMMISSION.  NOT NOW, NOT EVER, NEVER, NEVER, NEVER!!!!!  Please.

Show All Comments Sort:
Brian Brumpton
Keller Williams Boise - Boise, ID
Boise Idaho Real Estate

Brenda,

The size of the note is negotiable.  You should always advise your clients that the lender may require that up front when taking the listing.  I agree your only obligation is to present.

Mar 08, 2009 03:04 PM
BRENDA ROGERS
WEICHERT REALTORS/PROPERTY PARTNERS - Celina, TX
Experience You Can Trust
  1. Thank you for the advice, Brian.  I do advise my clients of every possible scenario prior to listing their property and I most definitely include the possibility of this request from their lender so that they are prepared when and if it does occur.  My biggest concern is that they actually do sign it, default on the loan because they really could not afford it in the first place but felt like they did not have a choice.  Should they default on this unsecured promissory note, the lender can get a judgment against them which will accrue interest over time, court costs and attorney fees and you have, once again, a financial obligation you cannot meet and it looms larger and larger and will prevent them from being able to purchase a home they can afford at some point in the future.  I realize that this discussion could lead us into a conversation about the debtor's responsibility which would lead us around in circles.  I would like everyone to consider the big picture here. It is a second chance and, regardless of how and why that chance is given, it should be given without strings.  That, of course, is my opinion.

 

Mar 08, 2009 03:59 PM
Jim McNinch
Trademark Loss Mitigation - Spring, TX
Short Sale Specialist, Texas

Brenda:

Stick with your negotiations.  I have often been able to reduce or eliminate the Promissory Note by either further negotiations or a final counter. 

Does your homeowner have significant income over expenses?  I often see lenders going after promissory notes more often for sellers that have stated income over expenses.

One more reason CW continues to be on everyone's black list!

Foreclosure Prevention Network
Providing Short Sale Negotiation, Training and Loan Modification
Address: PO Box 1998 Spring TX 77383.
E-Mail: info@shortsalereporter.com
Web Site:  http://www.forclosurepreventionnetwork.com
Blog:  http://www.shortsalereporter.com

 

Mar 09, 2009 05:53 AM