Monday, October 5, 2009

I'm On My Soapbox Again

I have a short sale listing. Back in March we got 5 offers, all above list price, and I sent them to the lenders. Lender Number One approved the short sale in May and offered $2,342 to Lender Number Two, a.k.a. Chase Mortgage.

Chase has been dithering about the deal since Spring but emailed me last Thursday…

[We] want to assist the debtor, but the realtors are making out on these deals and Chase is being asked to take a huge cut on a LOT of money that they lent out - in comparison.

...Chase would be willing to help if we saw some concessions come from other areas to increase their contribution. Will the realtors reduce their commissions?

I replied to Chase and post my reply here for your enjoyment. (By the way, Chase has had all of this information since April.)

The buyers offered $165,000 in cash with a 10 day close and have been waiting for your approval since April. If you’ll look in your file at the comps data we provided twice, you’ll see that the buyers are already paying at least $10,000 over current market value; they will not pay anything additional to offset Chase’s loss.

The homeowner is 100% medically disabled and hasn’t had any income since Winter 2007. Since then, he’s exhausted all his assets (401k, IRA, savings, etc.) on medical expenses. His car was re-possessed. He’s on food stamps and AHCCCS, Arizona’s medical insurance for the indigent. As we have previously explained & documented, the homeowner is unable to make any “concessions” to offset Chase’s loss. Besides, the end result is the same to him whether Chase agrees to sell short or not: he loses his home and gets a big black mark on his credit. Believe me, he’s got bigger worries on his plate.

You mentioned the “hit” being taken by the first lender but that is immaterial to this discussion. Lender Number One isn’t obligated to offer Chase anything, but offered $2,342 nonetheless. The foreclosure auction is scheduled for late December. The property will be auctioned and at that time, Chase will receive exactly $0. I’m no math genius but the last time I checked, $2,342 was bigger than $0.

You’ve asked the Realtors involved to cut their commissions. Freddie Mac policies forbids lenders from forcing commission cuts as a condition of approving short sales. This Realtor is an unrelated third party. I didn’t make a bad mortgage, nor did I have anything to do with the seller’s medical condition and subsequent insolvency.

I did the job I was hired to do: I found a ready and able buyer who is willing to pay more than the condo is worth. In cash. Next week. I expect to receive the fee I’ve earned. This Realtor will not bring any additional money to the table to offset Chase’s loss.

So where else to get the “concessions” you think you’re owed?

Maybe you can check with JP Morgan Chase top executives who took $1.12 billion in bonuses in 2008? Or maybe some of the $25 billion in TARP money Chase took is still under the sofa cushions in the executive lounge?

Best of luck finding that TARP money. Government bailout money you know… so pesky! So difficult to track!


PS -- the buyers bailed 5 weeks ago right after I warned you they would. They waited for Chase to see reason for nearly six months. They got tired of waiting and bought something else. Toodles!