One of my recent listings was a short sale which successfully closed May 22, 2009.  The seller was in a very tough financial situation, being unable to make the monthly payments on his mortgage loan and owing roughly $140,000 more than his home was realistically worth.

After months of the delays and bureaucratic bank bundling so typical with short and REO sales we got the bank’s approval of the sale last week and closed within a few days. 

The result was a home seller able to start a new life free of a crushing debt burden with his credit mostly intact and a home buyer who got a good deal by being very patient and understanding about the repeated closing postponements we had to endure at the hands of the lender.

Here’s what the home seller had to say:

“I can’t tell you how relieved I am. This has been a long and arduous journey and your help and guidance during every step has been nothing short of remarkable.  It would have been next to impossible to get this done without your continued assistance. You went above and beyond your normal role to ensure there were no delays from my end.  Kindly accept my heartfelt thanks for a job well done.”

The lender won also, because it very likely netted substantially more at the short sale closing than it would have received as a REO seller after an expensive foreclosure sale.

So if you are in financial trouble, a short sale can be the intelligent, proactive way to shed debt, avoid foreclosure and salvage your credit rating.

Copyright ©2009 02038.com

This amazing quote is from an irate employee of an affordable housing organization trying to buy a foreclosed home. 

The man wasted weeks of time and effort dealing with the seemingly overworked and overwhelmed loss mitigation department of a major lender.  The department didn’t even know the bank didn’t have ownership rights to this home, one of the hundreds of foreclosed properties it was trying to sell! 

This cautionary story appears in the current edition of Banker and Tradesman, the respected Massachusetts real estate trade publication. 

It illustrates the nightmare of frustration and wasted time sometimes encountered by buyers seeking to buy REO (bank-owned) property.

Quoting again from the article:

“Lenders have been woefully unprepared to deal with the administration and listing of their properties; often, they aren’t even aware that a property is theirs.”

A look at the numbers helps explain why REO lenders are often so dysfunctional with the management and sale of foreclosed properties: there are approximately 5000 REO properties currently in Massachusetts, according to The Warren Group, publisher of Banker & Tradesman.  Of those, about 1,700 are being administered by US Bank and Deutsche Bank, the two largest servicers of REO properties in the state.

That’s a lot of homes to handle!

When you add in the 1000s of short sales that are currently ongoing in MA, you can imagine how much potential there is for misunderstandings, delays and mistakes while trying to negotiate a transaction with the loss mitigation staff of a lender.

While there are good deals to be had with REO homes and short sales, just beware that many buyers are reporting frustrations and blown deals due to the inability of the lenders to cope with all the bad mortgage loans that keep landing on their doorsteps.

Copyright ©2009 02038.com