short sale system

Here’s the (my) Answer to WHY
Banks Make Such Crazy/Illogical/
Sometimes Stupid Decisions! (Part II)

(Yes, that means there will be a Part 3!)

Why do banks make such illogical decisions?

• Like change the FHA ‘how long you have to be on the deed
  before you can resell it’ 90 day Seasoning rule.  They
  just changed it in February 2010 allowing you to resell the property
  after a 2nd appraisal.
• Like HAFA’s rules when you close a short sale insist you
  hold the property 90 days before you resell.
• Like banks taking their houses to foreclosure when the buyer is
  a Company.  (LLC, Corp, Etc.)
• Like banks not accepting offers from companies (LLC, Etc.)?
• Like take a house to foreclosure sale when there is a qualified
  offer on the table but it wasn’t submitted more than 21 days
  or 14 days before the sale date.  (Lazy?)
• Like Fannie wanting to start making homeowners who do
  a short sale responsible to pay the unpaid balance and
  not let those who walk away from their house when they really
  could afford the monthly payment to not get loans through Fannie
  for as long as 7 years.
• Like only give help to people who are way behind in payments
  and not to the struggling homeowner who is giving up lots to
  just keep making their mortgage payment and not have a life?

Ok, my answer probably won’t explain all of the above.  But it certainly
will explain the first 5.

First:

Their logic is not based on our logic.

Our logic believes they should do what they can to get rid of their inventory
not create more inventory.  Sell the house when there is a reasonable offer and
not devalue the neighborhood.  If there is an offer they should take it – within
reason, of course, so if there is data to say the offer is Fair Market Value,
they should take it.

Our logic believes this is a capitalist country/society and if we have
specialized knowledge to allow us to resell the house after repairs or
not and make a profit - we should.  If we find the somebody else who wants
to pay a little bit more and we can get it closed WHILE BREAKING NO LAWS,
we should get paid for that knowledge and skill.

It still is a capitalist society.  Not to defend the banks but…We/they are also run
by the Constitution where we still have the right to freedom of speech
so the banks do have the ability to make those decisions on

• who to sell it to and
• who not to sell it to

as long as they do not discriminate among the protected classes.

However, a good business decision (on a small business basis – not on a
large business because obviously they are too big to fail LOL) would seem
that they should take the offer and sell it to a buyer today to cut their losses.
Even if the buyer might make money when they resell it.  It’s not likely that the
bank will make that money later.

Here is the Likely Scenario

• The bank will take it back through foreclosure.
• It might not even be listed for sale for 1-2 years, and maybe 2 days
• It won’t sell for another 6-24 months and
• The possibility of the Fair Market Value continuing to drop

The house will bring even less money later than selling to
someone who will make a profit today.

The bank won’t make the profit we would because of time and
they don’t have our knowledge.

A logical decision would seem to be to cut their losses now, put somebody
in the house and the bank stop paying taxes, insurance, upkeep (cut grass,
winterize the pipes, worry about the pipes being stolen, etc.) and just making the value of the house less.

Or they will leave it in the defaulting homeowner’s name and make them
responsible for all of the above even it went to foreclosure.

Tomorrow I will answer WHY for a different reason than they are a capitalist
company and the right to make what appear to be stupid decisions and they
want the extra money but will never get it.

Sorry for the delay.  I had more to say that I thought I did.  However, this
scenario is a great one to run through the next time the bank gives you any
of these reasons why they can’t accept your short sale.  Ask them if theyrealize they will make less money if they don’t sell it today versus months in the
future.

Deb McMillan
The Short Sale Queen® and Coach
Get Started with Short Sales
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www.ShortSaleQueen.com

I keep hearing what a good thing it is that the banks have paid back the TARP money to the government.

That they are right again with the public and tax payers and all isrithgt with the world.

It just has felt wrong some how but I didn’t know enough to talk about it.

I have learned a little more.  Did you know that once the banks pay back all the TARP money they have borrowed from the government, they now get tax credits on each short sale or loan mod and maybe foreclosure that they do?  The get a tax credit for the amount of debt they forgive to the homeowner.

Therefore, the HAFA program that I wrote about last, the 2nd and additional lien holders are “supposed” to forgive the homeowner of the  unpaid balance and not go after them for the difference.  However, the first declaries it doesn’t and won’t have time to “ensure” they don’t pursue the homeowner so if the homeowner doesn’t get something FIRM in writing, those additional lien holders CAN and most like will go after them for the unpaid balance.

Even though they get a tax credit from the government.

No wonder they paid off err, I mean paid back the government so quikcly.

What do you think about all this?

Deb McMillan

The Short Sale Queen® and Coach

www.shortsalequeen.com

Saturday afternoon and evening I spent my time at a wedding reception.

This was no ordinary wedding reception.  The wedding was 3 weeks earlier and in Gatlinburg, TN.  And I wasn’t there.

But I was invited to the reception.  It was an outdoor picnic with family and friends. – Approximately 60 or so.

And who was the Groom?  None other than a family friend.  And what is his job by day?  A loss mitigator for a bank I can’t name.

Yep, a Loss Mitigator.

• One of those guys who you try and try to get on the phone to negotiate DOWN their offer.
• One of those guys who normally, you can’t get to answer the phone when you really need them.
• One of those guys who hold the keys to the kingdom to how the banks really work and can get your deal to the decision makes.

Not to worry.  The gift for the bride and groom was appropriate and memorable.

Stayed tuned and see if there are any “information updates” from smoozing with family friends!

Deb McMillan

The Short Sale Queen® and Coach

www.shortsalequeen.com

Get Free Tips and techinique at

www.BestShortSaleCourse.com

www.MyShortSaleTraining.com

I have been reviewing the HAFA program since it’s becoming more apparent that the banks want to have the homeowners enrolled in the program.

Have you looked at it?  It doesn’t look like a good deal at all to me.  Yes, not a good deal for the homeowners is what I mean.

The property has to be their personal home.  That’s normal.  But they must also still be living in it.  It is also very possible they may have to be making payments to the bank during the 120 days they give the homeowner to find a buyer on a short sale for a set purchase price the bank has per-determined.

UGH!  That who paragraph sounds like a lot of  “ifs” and a bad deal to me.

Also, when the homeowner signs up for the HAFA program, yest there is an Opt In Form, they agree to do a Deed-In-Lieu in 4 months (120 days) if the house doesn’t receive the desired short sale offer.

Does that stink?  In today’s market I’m guessing that the bank will price the house higher than it will really sell for.  And with the First Time Home buyers Credit gone, buyers are looking for deals.  So if the bank is pricing the houses high – no buyers will appear and the homeowner will automatically get a DIL on their credit.

OUCH.  That doesn’t look or feel near as good as a short sale or as easy to recover from.  Good job HAFA.  Really helping the homeowner.

We talk about all this and more on my weekly coaching call with short sale students all across the country.  You should be on there too!

Log on and learn more at www.shortsalequeen.com

That’s all for now

Deb McMillan

The Short Sale Queen® and Coach

When my birthday comes around each year, I know two things.

I’m getting older and hopefully getting a birthday gift or two and

a holiday is close.

It’s always Memorial Day.  And as I do get older I realize more and more how blessed I am to be living in the United States of America.

No matter what we think of the current regime, we still have religious freedom.  We have to remember who gave their lives to give us that freedom.

So, today think about the soldiers and their families who gave their life or their son’s life to keep up free.  It’s not like this in other countries.  And we may be losing some of those freedoms as we speak.  So say a prayer today.

Say a prayer for those soldiers who did give their lives.  Say a prayer for the soldiers who are giving up their families today.  Are in a foreign country without their families and some who won’t come home.

Be grateful for all the wonderful things we do have in our lives and thank someone for it.  A vet in a wheelchair.  Your friends father who was a vet.

And remember the price of freedom is never free.

Deb McMillan