There is a hidden secret in the
foreclosure business. Many lenders are losing money by turning down loanmodifications.
Here is how it works. A borrower
offers to pay his lender the monthly payment for a $400,000 mortgage. The
lender turns it down and forecloses on the home.
They put the home on the market and
it ends up selling for less than $400,000. If it sells for $350,000, then we
could easily argue that they lost $50,000. Let me give you a real life example.
A person buys a house for $300,000.
The local housing market declines and the house is not only worth $220,000. The
homeowner’s income drops and now they can only afford to pay the equivalent of
a $220,000 mortgage payment.
They request a loan modification.
Their lender turns it down. The house goes to foreclosure. Eventually, 18
months later the home is foreclosed upon. The homeowners move out.
The lender lists the home for sale.
Because of the continued decline in the housing market, the house ends up
selling for $180,000,
The moral of the story is: The
lender would have been better off accepting the $220,000 loan modification
versus foreclosing and selling the property for $180,000. What do you think?
I hope you are not one of the people
saying, “The homeowners agreed to pay the lender $300,000. They should find a
way to do it. Go get an extra job or mow lawns on the weekend.”
Let me know your thoughts by putting
a comment below. Thinking about a short sale?
I can help you short sale your
property and get back on your feet. Send me an e-mail at tom.mack@exprealty.com.
I will contact you for a free consultation.
When we talk, I will explain how the
process works in detail and answer any questions you may have. Or, if you
prefer, you can call me at 407-359-2220
Discover how other sellers
successfully completed a short sale and request a free consultation by clicking here.
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