I've been working on a short sale since February of this year. The first lienholder is owed $145,000. The second (21st Mortgage) is owed $25,000. After 3 months on the market at $119,900, I finally received an offer on the home. I was able to get approval from the first lienholder within 30 days.
The first allowed $3,000 towards 21st Mortgage. Keep in mind that 21st Mortgage primarily deals in mobile home financing. However, 21st Mortgage as a "very strict company policy" to not accept anything less than the same percentage loss as the first. (I know you're all laughing at this). Since when does ANY second get that much? Come on....you're the second in line. You knew that going into it.
After two months of negotiating with 21st Mortgage, and retaining an attorney to help us in the negotiations.....nothing. They won't budge. Not an inch. The attorney has thrown her hands up, and finally told me to give it a try.
I called the supervisor today. Here's how the conversation went:
Me: Hi. I was hoping we could get SOMETHING resolved here. The first is allowing you $3,000, I have thrown in $1,000, and the buyers are throwing in an additional $9,000. That's a total offer to you of $13,000. I only have a small window of time. The first has canceled their approval because we're past the deadline, but have agreed to a one-time extension if we can close in 30 days. The buyers are ready to walk. The first has already started the foreclosure proceedings. This is the absolute MOST we can come up with.
21st Mortgage Supervisor: How much is the first getting? 74%? Your offer only allows us 52%. Our company policy is that we will only accept the same percentage loss as the first.
Me: This is the most we can come up with.
21st Mortgage Supervisor: Don't you have more commission? We have agents that throw in their total commission all the time.
Me: Really? I've already thrown in $1,000. How about this....let's make a deal. I'll match you dollar for dollar. You throw in some of your personal paycheck, and I'll match it. That's fair.
21st Mortgage Supervisor: (Laughing) Yeah, that's not going to happen.
Me: I didn't think so. Seriously, this is it. We're out of time, foreclosure proceedings have started, and the buyers are walking. If you can't agree to this, then this contract is done, and even me and the seller are walking away.
21st Mortgage Supervisor: See, what you REALTORS® (drawled out and spoken with heavy sarcasm) don't get is that we don't have FHA backed loans here, we didn't accept any TARP funds, we are a privately held corporation and this is a real money loss to us. We're doing your client a FAVOR. We're allowing her to short sale her property for less than the amount of her note.
Me: See, what you don't get, is that you accepted that risk when you signed on to be the second in line. What you also don't get is that we know that at $13,000 you're making money on this loan. You bought this note on the secondary market for pennies on the dollar. At $13,000 you're making a profit. I get the fact that that is how capitalism in America works. I don't begrudge your company for making a buck. What I do begrudge is when capitalism crosses the line into pure greed at the expense of others less fortunate. So don't sell me on this whole "we're doing your client a favor." She's YOUR client, too, and you just shoved her into foreclosure because a 110% profit margin wasn't enough for you.
21st Mortgage Supervisor: How do you know that?
Me: Simple. I researched it. I looked it up.
21st Mortgage Supervisor: It doesn't matter. That's still our company policy.
Me: So, you're willing to allow the foreclosure to continue knowing when this home sells on the courthouse steps you will get $0? Do you realize that most second lienholders don't even come CLOSE to getting this percentage? Do you realize how rare it is to find a buyer in this market with additional cash in their pocket to be able to pay this to you?
21st Mortgage Supervisor: Ma'am, that's our company policy, and the more you talk, the more you're wasting my time and your breath.
So...there you have it. Pure stupidity blinded by greed. The shocking part of this....they are owned by Berkshire Hathaway. I read today that Berkshire Hathaway's profits are down 40% right now.
The buyer's agent is preparing a Mutual Release. Once signed, I intend to email it to the supervisor at 21st Mortgage. When the foreclosure notice is printed in the newspaper, I'll be forwarding that to him as well. And when the home sells on the courthouse steps, he'll get another nice little email from me...one with hundred little laughing smileys jumping all over.
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Lina Robertson Jones
Owner/Agent
RE/MAX Solutions
1715 James River Road
Ozark, MO, 65721 |
Mobile: (417) 844-7265
linarobertson@remax.net
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RE/MAX - Outstanding Agents, Outstanding Results!
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About the author: I am full-time REALTOR® with RE/MAX Solutions in Springfield, MO, and a member of the Greater Springfield Board of REALTORS®. I have helped hundreds of families in the Springfield, Nixa, Republic and Ozark real estate markets, whether buying a home, or selling a home. Visit my website at www.ozarks-realestate.com to search for All Springfield MO Area MLS listings. Want to know what our market is like? My website is also an excellent resource for current Springfield MO Area Real Estate Market Reports, as well as current market reports for Ozark, Nixa, Republic, and Rogersville.
I had a very similar conversation with a well known company - starts with CH and ends in ase. They too wanted all of my "highly paid commissions." When I mentioned I was calling the state banking commissioner for extortion, the negotiator got really quiet. Still didn't get the sale, home still foreclosed, they got NOTHING.
STUPID, STUPID, STUPID, but it's company policy............
WOW! I always tell my kids that there is no shortage of stupidity out there and this story is proof that I am right!
Sorry to hear of this frustrating situation. I hope everything works out for you and your client.
I just thought I'd add this - one of my negotiators who's a go to guy every time I have a short sale sent me an internal email that said they were to deny outright ALL contracts on short sales where the close date is less than 5 days (10 days in Florida) before the trustee's sale date. Just a head's up for all of you working with the BIG 3!!!!
Lina, what a conversation. I bookmarked for my future reference. I don't have any short sale experience yet, and this is almost like hands on coaching to me. I am glad you know your stuff, Lina!
I have a short sale that is following your story to a T. Just different banks. It's very frustrating but a office mate tells me not to fret over things I can't control. I know he's right but it's hard not to do.
How long were the loans in place?? They got their INTEREST ONLY for how many years?!? I started to write a blog about AMORTIZATION -- and didn't finish it. Now I'm inspired. Thanks Lina!!
So what do they get if it doesn't work out? Like, um, ZERO? What idiots.
Sort sale often means short sighted!
Here's wishing you a great Saturday Lina!
Paul
Lina,
Sometimes when blogs are lengthy, I skim through them. But not yours. I know exactly how you feel and personally, I've become very, very, very selective about any short sales. Simply, there is no profit in them, given the reduced commission, number of hours and dealing with short-sightedness from companies like 21st Mortgage.
Lina - Wow, I can't believe you were able to come up with $13K for the second, that's impressive. You would think any second lien holder would be jumping through hoops to get that amount, I guess not. I wonder how much their "policy" has cost them so far.
Lina, All that work, knowledge and experience on your part and it was like talking to a brick wall. Good luck on the next one, if there is one! I had a friend who used to say "You can't save people from themselves"!