This past weekend I had a series of very interesting conversations regarding the economic crisis. home retention and short sales. As many people know, I practiced real estate and specialized in short sales. In my personal defense, I offered a short sale solution as the last scenario if foreclosure was inevitable. Believe, me, if I pushed short sales without looking for other solutions that kept the client in the home, I would have sold more homes and be in a LOT better financial shape myself.
What I encountered and was surprised to learn, is that there is a group of people out there who assume that anyone who has any involvement in a short sale is part of the problem, not the solution. I was completely caught off guard when I found myself sitting across the table who thought I was evil incarnant because of my short sale past. Some people believe that anyone who sold a home as a short sale actually wanted to keep the home. This is the extreme argument to banks claiming people are walking away from their homes.
As is so often the case, the truth lies between the two extremes. I certainly have worked with people who worried themselves sick in an effort to keep their home. I have also worked with people who had to sell and the declining market (or poorly timed equity out refinancing) owed more on the home than market value.
The story you are about to read is true, the name and personal circumstances were changed to protect the individual’s identity: Jane had moved to Asheville on the promise of a teaching job. Jane bought at the height of the market in 2005 with a form of 100% financing. Jane’s teaching creditionals were questioned so she could not find employment in the public school system, so she tried a few entreprenuerial activities to make money. Sadly, she lost money, but in 2006 was able to negotiate an equity out refi where she was able to bank about $28,000. She continued to dabble in the entreprenuerial world, but failed to make a dime so in 2007 she negotiated a second equity out refi and banked about $18,000. In 2008, Jane still had no job and had spent the “equity” money. She was broke, facing foreclosure and just wanted to return to Champaign where her teaching credentials were valid. Sadly, her home ’s market value was about $50,000 less than she owed!
Jane had to leave as she could not find work. Jane had two choices. She could simply walk away and allow the home to be foreclosed. She could try to sell as a short sale. Jane talked to me and agreed that the short sale would not only be a less of a hit to her credit rating, but by avoiding foreclosure she was protecting the property values of her neighbors. It took a couple months, but we sold the home, the lender (who was willing to allow repeat equity out refi’s) foregave some debt and the neighborhood avoided a foreclosure.
In this instance I feel short sale was the correct way to go.
Tags: Asheville, deed of trust, distressed properties, foreclosure, incentives, mortgage, pre-foreclosure, real estate, reo, short sale, short sales, Top Producer, WNC Carolina
June 15, 2009 at 8:37 pm |
[...] Original post by billmcmannis [...]
June 26, 2009 at 12:42 pm |
Before taking loan we must think how we can repay it, to avoid shortsales.
June 26, 2009 at 4:38 pm |
I agree wholeheartedly, but many times homeowners find themselves in unexpected circumstances. Well over half of the people I spoke with over the past three years who were facing home loss was due to unexpected illness or injury and no health care coverage. Few people understand how intricately the health care crisis is tied to the foreclosure crisis.
In the case of Western North Carolina, the lack of depth to the job market as another serious problem. If the homeowner unexpectantly loses a job, finding a new one is not as easy as larger metropolitan areas. What we see are economic refugees who must leave WNC in search of work, but they find themselves upside down in the mortgage.
Should homeowners consider how they would pay a $30,000 medical bill when they buy a home? Should they only buy a home if they can afford the home after losing a job?
July 14, 2009 at 10:14 pm |
this post gave me reason to think, thanks…