We avoided a deficiency judgement

The last  story for my state representative This one happened in 2011….

Judith and Sam,

Judith and Sam are friends of mine.  I was at their wedding.   Their story is a little different They only had one mortgage and it was for a mobile home on a rented lot.  They bought their home right after the marriage for $59 K… Things were going OK even thought they were paying over $900/ month for their mortgage (payment) and lot rental…Then Sam lost his job.  He was unemployed for over a year.  They did some things to try to keep body and soul together.  A paper route and a home day care business. But it wasn’t enough. Plus they had 4 children.  I heard though the grapevine that they were in trouble and I got involved.  After 10 years of owning their home they still owed $57K on it and it was worth $30 K. Molbile homes are on rented lots are different.  They are repossessed like cars but they are really homes that people live in.  All the laws to protect homeowners do not seem to apply to these people.   I asked 3 0r 4 lawyers for opinions.

I talked to the bank.  They were most unhelpful.  I tried to get them to modify the loan.  I suggested that they lower the principal and put the mortgage at 8%.  That would bring the payment down to place they could afford.  The banker kept saying that they could afford their mortgage.. They could not…  They had 4 children, the youngest a newborn.   I then suggested a deed in lieu of foreclosure The banker seemed to sneer over the phone line.   I set up a plan with a charitable group.  They had offered help with the deposit and some rent.  I suggested we needed a lawyer to give pro-bono work for a bankruptcy and that the charitable group  would pay the fees.  They could also help with the deposit Time passed and the phone rang.  It was another banker and she offered a deed in lieu of foreclosure and gave them 2 months to move out and $300.  I also had them agree not to go for the deficiency so they did not need the bankruptcy lawyer J.    Despite all of my friends problems the only item they were behind on was the payments for the mobile home.

Without the negotiation my friends would have been hit with a deficiency judgment and forced to declare bankruptcy.

 

 

Will Aishia get a deficency judgement?

Deficency judgement continued….

Aisha

In October of 2011 I showed a house for a buyer.  The owner was home.  She is a lovely lady who developed breast cancer.  She was paying her mortgage until she couldn’t work because of the cancer.  Aisha is a single mother who now has a reasonable job.   She tried to get a loan modification but her bank wouldn’t talk to her.  They tried to tack on all sorts of fees and call it a loan modification. Aisha has two mortgages.

When her home either short sales or is foreclosed on she will get a deficiency judgment for the second mortgage.  So first you get sick. Then you lose your job. Then you lose your home. Then you get slapped with a deficiency judgment for the entire second mortgage.

Contingent short sale? What is it?

So we know a short sale is when the seller owes more then the house is worth….. So the third party the lender needs to approve or even renegotiate the deal….. We have all seen this…..

 

So the short sale listing gets an offer the buyers and the sellers come to terms….. Now the package is sent to the bank… If the buyer and seller are lucky the bank has given the listing agent an idea where the house should be listed…. More likely they told the agent they wouldn’t talk until the agent had an offer….

At this stage the sale is marked as a contingent short sale… The sale is contingent on the bank agreeing to the terms or renegotiating the contract.  The bank can take as long as they want….They never seem to care what the timeframe of the offer is…. The classic question of the buyer is when can we move in?  The answer is 30 days to never.   All rules of ethics seems to go out in a short sale situation.  Unless the listing agent sets rules position doesn’t matter very much…If more offers are sent to the bank they just reject the lower offer no matter when it comes in…   The sale is still active in the multiple listing service (CSS) but venders like Zillow don’t seem to have this information… Also some buyers are insistant on seeing them… Once in while you get the news that they welcome backup offers because the buyer is about to walk…Or the offer is to low….

I ask my buyer why would you want to look at a contingent short sale?  It’s mostly like a pending without bank approval… During the time the a property is a contingent short sale everyone waits…. No money is spent and all timelines are suspended while bank approval is sought..  The bank will either say yes, no or renegotiate…. Often the bank will let the home go to foreclosure (especially if the offer is low)…

Many times a buyer walks (they actually do want to buy something) and the agents lists the home as active and seeks another buyer to slip into the spot.  These are better for the new buyer because the process is started…

If you need to settle a deal quickly it important to stay away from most short sales and contingent short sales…Once in a while the buyer walked as the bank came back… Those are the safe short sales to buy in a timely manner…Your real estate agent knows the lingo to indicate that a short sale can settle quickly.

After the bank comes to terms with the buyer and the seller the listing status changes from contingent short sale to pending…. I hope this helps…

  Debbie Holmes

Gold Key Real Estate    

(208)761-2551 Email: d5holmes@msn.com

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