Successful Short Sales in Marin County: Part II

Posted: May 7th, 2010

The Homeowner’s Perspective
(The Second of Four Installments)

The increase in short sale success is good news for homeowners because even though the process is long and difficult we, banks, real estate agents and our clients, are finally getting into the groove and developing ways to succeed.

Options

When a property is upside down (the mortgage amount is greater than the value of the home) or the owners are in financial difficulties (job loss, income shrivel or medical bills) the owners have a variety of options:

- seek a loan modification
- live rent free as long as possible while awaiting foreclosure
- short sell the property
- keep paying the mortgage while waiting for the market to improve.
- file for bankruptcy

Each of these actions will impact on the homeowners’ life, their credit and their future well-being and legal/tax advice is a must.

Waiting

Waiting for the market to rebound may be a very long wait because of the amount of shadow inventory (4-5 million homeowners under water) and because the banks are being encouraged to do short sales rather than modify loans or refinance. For home prices the recovery will be very slow – the whole economy (unemployment, housing, the Euro, the stock market) will have to get us back into a consumption mode before housing turns the corner.

Waiting for a loan modification is an exhausting, draining experience: Massive amounts of paperwork are required, sometimes submissions are deemed incomplete for inane reasons and a resubmission is required.

If the homeowner is behind on payments, the lender may file a notice of default and proceed with the foreclosure in spite of a modification in progress.

Making tough choices

For the homeowner acting without council, choosing the right options is risky because financial distress includes many stressors:

- potential loss of home
- phone calls from debt collectors
- stress-induced health impairment: lowered immunity, memory lapses, sleep disorders, weight gains and losses …. (this list is akin to a list of depression symptoms)

With their life on hold

- time moving in slow motion
- income diminished
- often being out of work
- the bank being unresponsive to their attempts at loan modification
- the homeowner, often dangerously tired, may become volatile, upset and is prone to mis-steps.

As the impact of the stress, distress and pain extends from the pocket book it moves into the emotions with consequences that include a falling sense of self worth, a sense of failure, anger, fear, denial, and humiliation … all of these leading to ‘out of body’ experiences which may in turn lead to a downward spiral of fender benders, headaches, fights and inadvertently late payments.

Adding to the emotional distress is the mass of paperwork. Here is a recent set of short sale documents sitting on the desk of Rocky Vannucci.

Bottom line: Without a level-headed, experienced guide through the short sale process emotional decisions can turn into regrets. In order to make a sound business decision the homeowner needs to stop and talk candidly with their trusted advisors (attorney, accountant, therapist and real estate agent) and then make a decision on how best to proceed.

If you or a friend or family member are working with a lender on a modification or considering your options doing a short sale or facing foreclosure, email me at or call me at (415) 257-2039 and we can discuss the possibilities.