Many More Short Sales Coming in 2013
Recent news articles and industry experts suggest that 2013 is going to be a record year for short sales. I will attempt to give you my opinion of why I agree with these projections. The economy is still lagging and the outlook doesn’t have too many bright spots going forward. The tax law has been extended which is good news for sure.
Many people will finally realize that they will never recover their lost equity and the banks will not forgive any of the negative principle so why continue to hang on. Sometimes you have to just clean the wound and let it heal so that the problem gets better and not worse.
I talk to people struggling with this decision everyday and my question to them is: where do you want to be in 3 years? If you want to be in a better position than a short sale NOW quite often makes the most sense. Hanging on for emotional reasons most likely will result in being in a worse position in 3 years with a lot more suffering to come because they are hanging onto a toxic mortgage.
Don’t get me wrong – IF the banks were forgiving principle it would be a different analysis – but I don’t see that happening in the real world. I think if the banks really did want to help homeowners who are struggling we would be seeing the good news nightly on our local news cast… but I don’t ever see good news on my TV.
The banks are back making record profits and doing very little to help underwater homeowners. Sometime in early 2012 the banks started having multiple seminars, webinars, etc.. about how they were improving the short sale process. I attended numerous of these and at the time wondered why they were doing this so aggressively.
And then I read the Attorneys General settlement and it all became very clear to me. The largest portion of the settlement referred to the amount the banks would apply to principle reductions OR short sales. When I saw the big OR I then knew what the banks were doing.
The banks have decided that they would rather do short sales than to forgive principle. You see they know that if they start giving people a break by reducing the principle then the floodgates would open and everybody with an upsidedown mortgage would be knocking down their doors. To give them a little (very little) benefit of the doubt – it would really devastate the banking industry if they had to forgive ALL the negative principle that currently exists so they choose to fight it at all costs.
One crafty thing I did notice was BofA sending out 45,000 letters forgiving the second mortgage to some of their borrowers. This was a very shrewd move on their part. They got to say that they were complying with the national settlement terms and at the same time they were forgiving debt that was pretty much useless to them anyway. You see a second mortgage becomes an unsecured lien at some point and it most likely would have cost them money to hang on to something that was worthless anyway.
I always tell people that the banks are only going to do what makes the most sense for the banks. They don’t have a mechanism for empathy or sympathy. They are ice cold frigid institutions that only care about one thing – MONEY. And yes they are back making lots of it.
So in conclusion the banks are pushing as much as they can for short sales (because they actually have less risk and make more money through a short sale versus a foreclosure) and a lot of homeowners will finally give up. When a homeowner does finally say enough then most of the time a short sale makes the most sense.
There are of course other options such as bankruptcy, etc.. So the most important thing you can do is get a LEGAL consultation right away. All of your concerns are legal in nature so ideally you need a lawyer who knows real estate and bankruptcy and I am that lawyer.
If you have any questions or concerns about your own personal situation I would be happy to give you a FREE one on one legal consultation. You can call me at 916.442.6400 or send me an email at firstname.lastname@example.org or just visit my website www.upsidedownca.com.
California Attorney and
licensed Real Estate Broker