National Closing Center

Posts Tagged ‘scare tactics’

Reading my daily dose of news on real estate and short sales, I came accross this opus:

Arizona Real Estate Commissioner Judy Lowe says, “There is a dramatic trend toward this [kind of mortgage fraud]” in the Valley. Lowe points out that the low-ball price in the first sale of the home makes a larger deficiency in paying the mortgage balance—and therefore may mean the seller owes a larger tax burden for the deficiency. The low price also hurts home values for everyone in the neighborhood.

You can read more here >>

This is, of course, quite a random rant. On the other hand, it’s on local TV channel’s website. And it bears exactly the same message that pops up more and more often. It boils down to something like that: These new things like short sales must be taken with a grain of salt or even shunned. All these bad people who invented bad loans now are praying on broke homeowners trying to strip them of their last pennies. And so on and so forth; you get the gist.

There is no doubt mortgage fraud exists. Although I would say more on the side of irresponsible wannabe homeowners, who used to provide numbers off the top of head and loan originators, who would not only accept these numbers, but would encourage that kind of fraud.

Event top people behind the programs like HAMP acknowledge there is no way to tell for sure, at least not in all cases, who engaged in fraud, and who were irresponsible, ill-informed or plainly financially illiterate. Now we all are left to deal with the mess. So if scape goats are needed badly, we can go back to the originators and lenders. But this is not going to help anybody.

Short sales are completely different beasts and yet I have to see a person who sincerely cannot afford his or her mortgage and who would not benefit from a short sale. If (and only if) the transaction is done properly. So, yes, there are some unprofessional and plainly incompetent people who have no clue about actually helping distressed home owners to get out of the mess.

However, their number are nothing compared to the amount of lenders who were ready to give loans to anybody with an ability to breath. So trying to scare people and discredit one of the best solutions available for homeowners in trouble is not going to help anybody.

Majority of those considering short sales without taking a proper action are going to end up dealing with a foreclosure, bankruptcy or both. Now who we are going to blame for that? Fraudsters and real estate agents?

Market will have to clean itself, and short sales are a better evil. So stop scaring people and start educating them, so we all can move on to the better future economy.