Newbie and Question about short payoff/sale

[drea28]

Hi everybody...I'm new the forum and hoping to get some help/advice.
I posted my story a few days ago asking for help with ASC and doing a mod vs. a short payoff or sale.

These are my stats:

Original loan - $345,000
Current principal balance - $341,000
Current balance with all late fees, past due payments etc. - $420,000
Original payment - $2,989
Current Payment $3,970
Interest rate - 9.675% ARM (was due to reset but did not change due to prime being so much lower than our rate)
Term - 30 yrs. (27 left)
Property Taxes - $9200 per year
Current market value of home -~$300,000 (amount given by appraiser who evaluated the house for H4H program in March)

We started asking for modification consideration back in November. We have applied at least 5 times since then, not counting H4H and the HAM program from Obama. It seems our investor, Deutsche Bank, does not participate in either one. We were told this after our 6th request to have our financials forwarded to the dept. handling the plan resulted in no response, just like all the other times. Our balance due has grown by an outrageous $80,000 due to an increase in payment to cover a deficient escrow account and months of lost paperwork, stalling, and denied applications by ASC. We were FINALLY approved for a modification 2 weeks ago, and I was elated - until I found out that the payment was only brought down to $3,300 - which we still cannot afford.
It is a fixed interest rate mod at 5.125% for the remainder of the loan with an $8,000 up-front payment to stop the forclosure process. We currently have a sale date of Aug. 26th.
Today I called ASC to inquire about short sale and short payoff opportunities. I spoke with 3 different reps who all told me that I could apply if we decline this mod offer, but our chances or getting approved were not good if we declined the mod. I explained that our financial info has changed and we have more expenses - had to buy a new car because the old one died, now have a small car payment & increased insurance, etc... and we definitely cannot afford that payment. They said to reapply with new financials.
When I asked about possibly doing a short pay-off vs a short sale the girl told me that it was next to impossible to get a short pay-off approved and I had a much better chance with a short sale. Can anybody explain to me why??? I would think the bank would want to avoid further fees, such as comissions, realtors, taxes on the house, etc... Am I just stupid or is there something I'm missing???
Please let me know...any advice or help would be greatly appreciated.

[faith]

Hello and welcome to this forum,

Short payoff you ask the lender, they might consider approving it and depending on your financial hardship, you will have to sign a promissory note to pay the balance owed which is considered an unsecured loan.

Short Sale you ask the lender, they might consider approving it only IF YOU ARE EXTREMELY IN FINANCIDAL HARDSHIP, loss of income, disability and unable to buy anything or afford anything and unable to pay your monthly mortgage. You have to list it with Real Estate Agent, give a letter of authorization to that agent to talk to your lender. They may require you to sign also a promissory note for the balance owed and if you don't sign the promissory note, they will not approve the Short Sale. In other words, Short payoff and Short Sale is about the same, it's just different terminology and the lender has the right to approve your request or not depending on your hardship and financial circumstances.

.
The links below will give you an idea about Short Sale

http://www.loansafe.org/forum/short-sale-outpost/

The link below will explain what is Short payoff and Short Sale

http://drdbroker.wordpress.com/2008/07/15/short-sale-v-short-payoffwhats-the-difference/

[drea28]

Thanks Faith. Those links were helpful. I still can't figure out why the reps are telling me that the investor will approve a short sale, but it is very unlikely for them to approve a short payoff - that hardly any get approved. I would think they would want to save all the extra time and trouble and money spent with a short sale rather than just a payoff. At the very least, they would be saving the realtor comission and appraisal and all the other seller's fees by doing a payoff correct???

[faith]

Originally Posted by drea28

Thanks Faith. Those links were helpful. I still can't figure out why the reps are telling me that the investor will approve a short sale, but it is very unlikely for them to approve a short payoff - that hardly any get approved. I would think they would want to save all the extra time and trouble and money spent with a short sale rather than just a payoff. At the very least, they would be saving the realtor comission and appraisal and all the other seller's fees by doing a payoff correct???

Drea28,
Maybe this will help you.

In Short Sale, the seller hires a real estate agent, market the house, send flyers,, do open homes, negotiate with the lender's negotiator, and are eager to sell the house so that he(real estate agent) can get paid 5% commission from your lender and he works for you. In short, you and your real estate agent do all the work, all they have to do is to wait for a buyer to make an offer to buy your house. The buyer pays their commission, the lender may or may not charge you of closing costs which is around $5 to $10k. They are willing to do that because they don't do anything, just waiting for an offer to come in. If you have purchase money mortgage and never refinance the lender may or may not forgive the balance owed according to CA Section 580b.

In Short payoff, the lender does all the work. They will hire a real estate agent in which he does everything for the lender, in other words the real estate agent works for the lender and not for you, will force you to sign a promissory note that you will pay the balance owed. While in Short Sale if they tell you to sign the promissory note or else they will not approve the Short Sale, you can say TAKE THAT HOUSE AND SHOVE IT, meaning LET IT FORECLOSE AND I WILL FILE FOR BANKRUPTCY. By the way I did say that to my Negotiator, Countrywide is the lender, investor is Fannie Mae. And I was sucessful in doing Short Sale, thank God for Moe for all the information he has given us. And I did not sign the promissory note and the balance owed was forgiven.

God bless you and take care.

[drea28]

The short payoff that I am speaking of is also sometimes called a short-refi. It is where the borrower refinances the home at the current market value, and the original bank/investor agrees to accept those funds as payment in full and waive any deficiency that may be left, enabling the homeowner to stay in the home. Since no realtor is involved, there would not be any comission fees, or closing costs as they would in a short sale. I would think this would make a short refi more attractive, but I am beign told no, that the investor is more likely to do the short sale...
In my case, we figure that the fair market value for the house is around $300,000 so my family would take out a mortgage for that amount (or 80% of it to get to an 80 LTV) and Deutsche Bank would have to agree to accept those funds as payment in full even though my loan balance is $420,000. To me it is much easier for them to just accept the payoff from us instead of doing the short sale, or even worse, having to forclose and market and upkeep the property themselves.

[faith]

Oh, I am sorry, we are talking of two different things. The latest program available for distressed homeowners is called Short Pay off Refinance. This program allows home owners who are current with their mortgage to refinance into a fixed 30 yr mortgage at the current value of their homes.

A Short Refi payoff is when a borrower(s) try to refinance but the loan is SHORT to close. This occurs when the total payoff for the first mortgage lien or the first and second mortgage liens can not be PAID IN FULL. When the new loan for the Refinance does not allow for a full payoff of the first and/or second mortgage liens the borrower has to apply for a Short Refi Payoff with their current mortgage servicing, sub servicing company or lender


This program is for homeowners that are current on their mortgage payments the last 12 months. This can only be achieved if the lender participate in this program.

I think you should ask for the Deutsche Bank’s Supervisor’s phone number and email so you can discuss your situation with him or her.

Good luck to you, God bless and take care.>>

[drea28]

That is what I was talking about Faith. I would love to call Deutsche, but nobody seems to have contact numbers, as they are an investor. My servicer is ASC, who I call daily, trying to get information from so I figure out my next step. Right now my choices NACA, NJ forclosure mediation program, to submit a short refi package to ASC myself. I was told that very few short refis are approved though, so I don't know what to do since my sale date is Aug 26th and I don't have too much time left. I would need both a rate and principal reduction to get anywhere close to a 31% DTI ratio, and nobody seems to go that far, even with the help of NACA. I am so confused it's rediculous.

[faith]

Originally Posted by drea28

That is what I was talking about Faith. I would love to call Deutsche, but nobody seems to have contact numbers, as they are an investor. My servicer is ASC, who I call daily, trying to get information from so I figure out my next step. Right now my choices NACA, NJ forclosure mediation program, to submit a short refi package to ASC myself. I was told that very few short refis are approved though, so I don't know what to do since my sale date is Aug 26th and I don't have too much time left. I would need both a rate and principal reduction to get anywhere close to a 31% DTI ratio, and nobody seems to go that far, even with the help of NACA. I am so confused it's rediculous.

Drea28,
I just want to let you know that any negotiations, requests, dealings with any creditor or lender is a very frustrating, draining and emotional process. I have had 17 years experienced negotiating and dealing with Worker's Insurance, Hospitals, Doctors, Employers and Teachers and I've done it in an excellent and professional manner.

However in dealing with lenders, negotiators and creditors put me in a difficult and tough position. I have to swallow my pride, beg, help my agent to beg more and I pray a lot and ask God's favor daily..I really thank God for Moe and this forum. It really helped me how to deal with my negotiator.

Having said that, please prepare your heart for any decisions that your lender is going to make that is not acceptable to you. Sometimes when you know you have done your best and your best is not enough, it is better to let go. BUT, do not stop until you've done anything and everything, BE BOLD, BE PERSISTENT AND BE PATIENT. Always look up and say a Silent Prayer.

May God bless you and make his face shine upon you, May He give you success and give you favor from your lender, investor and everything you need to make your request come true. In His Name, I pray. Amen.

Take care,

[drea28]

Thanks again Faith. It is starting to look like the short refi is not going to be an option. Very unlikely they will approve it. Looks like our decisions are being made for us... Here's hoping that eith the NJ mediation program or NACA can do something for us!