National Closing Center

Posts Tagged ‘negotiating short sale’

MSNBC ran a lead story this morning, titled “More people see walking on mortgage as a viable plan.”

According to the article, nearly half f homeowners with a mortgage said they would consider walking away from their home if they owed more on it than it was worth, according to a Harris Interactive survey released this month.

Just six months ago, a similar survey indicated that only 41 percent of consumers would consider walking if they were underwater on their mortgages.

The article quotes a woman named Chris Kelly, who made a decision to leave her house in the suburbs of Seattle after divorce.

According to Ms. Kelly, she faced a tough decision: Leave the house while she still had decent savings, or pay until she’d emptied out all her accounts and then enter foreclosure.

And this is where we have to disagree. The decision is rarely like that.

The woman could have easily stopped paying her mortgage and started negotiating with her lender a short sale. It’s not a secret that most homeowners who are in the process of negotiating a short sale live in their house mortgage and rent free.

While some might say this is unethical or even plain wrong, we are not here to judge. Besides, if one wants to play a moral paragon, isn’t walking away on mortgage is more wrong and reckless than settling with the bank?

“The Florida-Times Union” has published an article that illustrates a common scenario from a lender’s playbook. It seems surreal and outrageous to homeowners involved, however, this is so common, that all you need in order to have another valid story is just to replace names and locations involved.

James Kowalski, a Jacksonville attorney who’s been defending mortgage cases, said he’s seen a lot of confusion from lenders. Homeowners follow the instructions of one department at a bank, he said, only to find out they’re being foreclosed by another.

“It’s a very common refrain from the folks who are trying to go through one of the three solutions: Short sale, deed in lieu (of foreclosure) and loan modification,” he said. “What happens is the servicer will set up a department that will be taking the short sale application and that department does not talk to the default department.”

“The homeowner has to go to court just to undo what shouldn’t have happened in the first place.”

And go to the court they must! Recently National Closing Center has been working with a wonderful team of real estate attorneys. We have found out that going to court does pay off. However, all of the parties involved, including your Realtor, short sale negotiator and the attorney must be experienced and know what they are doing.

In most cases, working with a team of professional short sale processors will result in homeowner being in the know and prevent such situations from happening. That being said, some lenders are so disorganized and their departments are so disconnected from each other that sudden notices of foreclosure in the middle of negotiating a short sale do happen.