A Principal Reduction for 2011 – More Proof Homeowners Must Save!
I can only hope that the last foreclosure case I worked on in 2011 was a sign of things to come for 2012.
Out of the blue, I randomly received a letter from BB&T offering to accept $27,300 as payment in full of my client’s outstanding mortgage if it was paid before the end of the year. This was a terrific offer, as my clients owed approximately $150,000 on their mortgage, and payment of this $27,300 would give them the house free and clear (and while the property appraiser’s values are hardly 100% accurate, its assessed value of the home is $54,000, showing this was truly a good deal). Plus, this offer was given with no strings attached – no financial disclosures were required, and it didn’t matter where the money came from – the bank was walking away for less than 20 cents on the dollar.
Candidly, my clients would have loved to pay this $27,300 and keep their house, but, unfortunately, they lacked the money or the means to do so. However, my clients were more than happy to get a deficiency waiver, which is what they’d be getting if they could sell the house for $27,300 (or something higher) to a third party, i.e. an investor. After some work, we found someone willing to pay more than the bank’s asking price for a deed. So just like that, viola! The bank got its money, the investor got a house, and my clients had to move, but they got a complete deficiency waiver, so everyone was happy.
I see a few morals to this story:
1. For the banks, deals like this should be more prevalent. Cut your losses, add some cash to your balance sheet, and move on. Or, you know, fight me in court. Your choice.
2. For homeowners facing foreclosure, save your money! Unsolicited offers like this are rare, but if you’re given one, you’ll be glad you have money set aside to take advantage (and you’ll be kicking yourself if you don’t).
I’ve been saying this for a long time, to anyone who will listen – if you’re facing foreclosure, it’s almost always a good idea to save money. Maybe you can use that money to pay off your mortgage. Maybe you can use it as a down payment for a loan modification. Maybe you’ll accumulate enough to buy an entirely different house. The possibilities are endless if you can save money, and that certainly beats the alternative, i.e. not having money, especially if you’re facing the prospect of getting foreclosed and having to move elsewhere.
3. For homeowners facing foreclosure, you never know what good things may happen if you don’t give up. If these homeowners didn’t fight, then would have never received this deal. But they fought the bank, stayed the course, and got a result that satisfied them.
4. The bank’s offer was predicated on getting the money before the end of the year, and that’s no coincidence. Banks want to improve their balance sheets before the end of each quarter, so keep that in mind when you’re negotiating. Much like a car dealer, the best deals are often available at the end of March, June, September, and December.
Let’s hope 2012 brings more stories like this! Happy New Year to all.
Mark Stopa
www.stayinmyhome.com
Posted in Main | 4 Comments »
Was this bank the proper party? Were they giving the homeowner a truly good deal, or were they merely trying to sweep fraud under the rug? Had the homeowner ponied up would they be receiving truly clear title?
Availing yourself of a truly good and genuine offer is always a good idea. However, given banks inclination to dishonesty and deception I would look this kind of “gift horse” in the mouth long and hard.
Original lender. No issues there.
I would like this outcome on my case, I owe 150,000 and the value is 58,000, but Chase is giving me the run around for a loan mod and they keep loosing my docs. I was given a summon and not answer at all.
Enid,
This is extremely, extremely rare … so much so that I wouldn’t incorporate it into my “goal” of what to do.
Mark