The Emotions of a Short Sale

I’m currently working with a homeowner in distress.  In the last six months both jobs have been lost, savings depleted and hopes dashed.  Eight years of home ownership is now 4 months behind with foreclosure the next step, only days away.

Denial, desperation and frustration are the emotions this homeowner has already experienced.  Apathy has now set in. 

“I really don’t care at this point.  It would be easier if they just took the house.”

A mortgage broker I know put me in contact with this homeowner.  He’s known the homeowner for years and years and he wanted the homeowner to work with someone he could trust.  Problem is any deal I can put together is too thin for investors.  So I turned to Countrywide Home Loans who holds the note.

Turns out they cannot authorize a short sale until the home has been on the market 90 days because this was a FHA underwritten loan.  But we are only 9 days away from foreclosure proceedings.

Listed the house, I did.  Got written authorization to negotiate with Countrywide, I did.  Patience, creative thought and cooperation from Countrywide, I need.  

I do not know if this will end in foreclosure, deed in lieu of foreclosure, short sale or subject-to transference.  All I know is that I pledged fiduciary duty to this homeowner and this homeowner is gonna get my best.  Because I can look into the eyes and see the emotions I previously mentioned.  And rather than get on the moral high horse I’d rather have compassion and help in any way I can. 

It’s easy to look at the housing crisis many are experiencing on a macro level.  I do it all the time.  It’s easy because it doesn’t involve an emotional investment.  But people are not numbers. 

5 Comments

Filed under Misc. Real Estate, Personal Real Estate Opinions

5 responses to “The Emotions of a Short Sale

  1. Brian

    Well said.

    I too have spoken to a few home owners who were trying to solve their looming foreclosure problem by putting a FSBO sign out front.

    Most of the people I talked to were where they were because of their own poor choices. That doesn’t change the feelings of helplessness and panic that they have. Regardless of the reason for their situation they’re struggling with, every time I’ve met someone like this my heart has gone out to them.

    Whereas in previous conversations with friends about the state of the real estate market I would either say or agree with statements to the effect of, “They made their bed and now they’re going to have to lie on it.”, there is a greater truth I’ve discovered.

    Basically, most people struggle in this life at some point or another. There are many valid reasons why a person’s emotions could get overwhelmed to the point that they find themselves unable to make good decisions or meet the responsibilities they took on. Death of a loved one, divorce, loss of income, and illness are simply the most common reasons. Where previously many people could squeak by these situations with the help of friends and family, the current state of the banking system and interest rate resets have cut the margin for error to just a sliver.

    I guess that’s just me being long winded in saying that I’m learning not to judge the people I talk to who are in trouble. It’s hard, though. I keep finding myself wanting to hold people to some sort of “higher standard”, which is silly really, as it’s not about objective “standards”. Life is about people.

    B.

  2. Brian, I think you get where I’m coming from. Yes, people do cause most of their own problems. So do you and I. A foreclosure is just a very public problem.

  3. People make honest mistakes in judgment — all people. Circumstances out folks’ control with the perfectly dastardly timing of our archenemy Murphy can result in what’s happening to your clients.

    People need our compassion, help, and prayers — not our judgment. It could happen to anyone.

  4. Another Investor

    There is no “moral high horse” to get on in this situation. These folks did not buy a house they could not afford or engage in risky speculation. They owned the house for 8 years and then suffered double job losses that could not be predicted. They went through their emergency fund/savings trying to get through the crisis. The only “mistake” they made was not knowing to call you earlier.

    I sure would talk to the folks at Countrywide about some forebearance here. These sound like people that would like to get back on track and would have worked with Countrywide if they had known how. Are either of the borrowers back to work? That would certainly help with the negotiations.

  5. Thanks for all the input. I am working with these folks to best resolve the situation. Not all facts have been shared here. They don’t need to be.

    But the experience reminded my of two things;

    1. Why I got into this business.
    2. That people are more important than numbers. Always have been. Always will be.

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