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Originally Posted by MRC123  Can somone help me understand why mortgage companies will take a short sale, but not write down our loan balances. Wouldn't it be less costly to just write down the principal of the loan and have the homeowner stay in the home rather than going the entire process of a short sale??? I don't get it.
Doesn't it end up being the same for them. They take the hit on the short sale. |
MRC123,
Lenders will take a short sale instead of selling back the house to you or write down the homeowners loan balances. The reason behind that is in accepting Short Sale they are at least sure that whatever the fair market value of the house they get that amount. Whle selling the house back to the homeowners or writing down the homeowners balance is a big risk, they don't sell the house back to the homeowner who has demonstrated the inability to make mortgage payments like I did. And lenders don't write down the homeowners loan balances just to qualify a homeowner. They do add to your principal balance whatever amount you missed paying the mortgage when they approved you for a loan modification.
Why take a risk with the current homeowner who already missed months of mortgage payments like I did when they can get their money right away as Short Payoff in full for whatever the fair market value is which is one house to worry by the way.
I've tried that with Countrywide Home Loans but they told me they don't do that, they rather sell it to someone who can afford the payment. Actually I've tried refinance, loan modification, deed in lieu, to sell back the house to me at the fair market value but they just said NO.
If you are thinking of doing Short Sale, you better do it now and act fast because buyers now are worried that the value of homes are going down down down. When I sold my house through Short Sale, my buyer bought my house for $298k on July 9, 2008, my neighbor foreclosed his house and was sold on July 14, 2008 for $229k and now the selling prices is down to $189k, some are really desperate, I've seen one selling for $150k which are all Short Sale. Some of them are selling their homes for over 2 years but no buyer.
Good luck and take care and God bless.
This is just fyi, hope it helps.
Faith
