To Keep or nOt to keep my house!

By
Real Estate Agent with Nicholas Real Estate

I had a client who came to my office and tells me "I want to short sale my House. It is not worth it to keep it. I can make my payments if I put some more effort, But I can also prove that I don't earn enough money to continue paying" What is the right answer? What do we suggest this person? Is it Ethical to help him to do the short sale? Does it really make sense for homeowners to hold on to their house knowing their house is worth 100s of thousand less than they  owe to their lenders?  How long is going to take for the market to turn around? How many years will take to make up the 100K loss that the homeowners incurred? What is a better option for a person who is under water for 100K or more? In the other hand, I had another customer who came to me asking me for a loan modification. I thought she couldn't qualify for loan modification and her house was worth about 200K less than she owes to her lender. She is a single mother of two girls. I suggested her to start all over and do the short sale. She didn't want accept that and she went to an attorney to do the loan modification. The attorney made his money, but didn't do anything for her.  She still think she is going to keep the house and somehow she will make it happen.  The market is still shaky. We don't know where the market is going? How do we help these people? All I know is that at least we need to be truthful and straight forward with these people. We need to be knowledgeable about other options and let them choose!

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Rainmaker
536,364
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi Hugo,

This is a dilemma we're all experiencing right now. Your statement about "All I know is that at least we need to be truthful and straight forward with these people..." is the right thing to do. Bottom line, we can review their options, but it's up to them.

Feb 01, 2010 11:48 PM #1
Rainer
231,138
Geoff ONeill
John L. Scott Medford - Medford, OR

Hi Hugo,  You bring up some very good points.  It is really difficult to speak with someone who has lost a great deal of equity in their home.  Is that fair to the person who paid cash for their home and has just lost 100s of thousands of their Equity?  So here's one take on this:  If your client purchased stock on margin, and the stock went down, he woudl be liable for the difference.  If he used a credit card to make up the difference and then stiffed the credit card company, they would come after him.  Some would say that the exhorbitant amount of interest the Credit Card company charged him was commensurate with the amount of risk they took by lending him/her the money.  In other words, The loan came with some risks to the lender, and they used their judgement to set the interest rate.  My guess is that your seller may not be able to "fool" the lender as easily as he thinks.  As you stated at the end of your Blog "be truthful and straightforward"  let your seller make his own decisions. 

Feb 01, 2010 11:57 PM #2
Rainmaker
848,740
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Hugo the truth is all we have.  I do not want to be telling the person that they cannot do a loan mod. and then they also get turned down on a short sale.

Feb 02, 2010 12:07 AM #3
Rainmaker
528,501
Ken 360.609.0226 Vancouver Homes for Sales
Ken's Home Team at Keller Williams - Vancouver, WA

all you can do is what they are askign you to do, as long as it is ethical... as long as you are not breaking any laws, you need to make sure that you inform them of the infomration so that they can make the right choice for them

Feb 02, 2010 12:09 AM #4
Rainmaker
251,689
Robert Machado
HomePointe Property Management, CRMC - Sacramento, CA
CPM MPM - Property Manager and Property Management - Sacramento Area

If you are not getting paid it is hard to give these people mucht time. I would refer them back to their bank or a loan modification specialist.  Tough times indeed.

Feb 02, 2010 12:20 AM #5
Rainer
27,290
Alix Pinzon
Southern California Mortgage Lending - La Habra, CA
Lic# 1167761

Good points.  It's hard to help someone when they're still living in the past.  Prices rising fast, etc.  I would ask them "how long would it take you to save that much?" being the difference between what it's worth and what they owe (negative equity).  Anyone who's more than $100k underwater should probably short sale, or let it go back to the bank or lender.  Times are really tough.  Waiting for a miracle, when you have a family to raise, that's pretty risky!

Feb 02, 2010 01:17 AM #6
Rainmaker
129,307
Ray Wright
Keller Williams Realty - Riverside, CA
- Inland Empire Realtor

I have people coming to me that used their house as an ATM to get cash for toys, boats, sea-doos, motorhomes, etc.  Then they want to short-sale or loan modification.  I have the hardest time dealing with these folks.  I'm in the business of helping people, not bailing them out after they make irresponsible decisions.  But then again, without all these folks and their irresponsible decisions...I'd possibly be out of a job.

By the way, where was the loan modification from the lender for the car I bought that I really couldn't afford many years ago?  Hmmm.

Feb 02, 2010 11:39 PM #7
Rainer
18,331
Hugo Meza
Nicholas Real Estate - Clifton, NJ

Ray, I totally agree with you

I had people coming to my office for loan mod after cashing out then buying luxury cars, houses in their native country, buying motorcycle, etc.  What shocks me is that they blame the goverment for not helping them! You sound like an attorney now "if people dont make mistake, attorney's would be out of job" lol

Since I couldnt break in to REOs, short sales are keeping me alive in this busines...and BPOs :)

Feb 03, 2010 09:39 AM #8
Anonymous
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Rainer
18,331

Hugo Meza

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