Today I met with another pre-foreclosure Seller. I sure am getting a lot of these lately. Anyway, I spoke with this gentleman yesterday and could tell he was really stressed out. Life had dealt him a bad hand this year, health wise, and he has found himself disabled and unable to make mortgage payments. In fact he hasn’t made any for 5 months. His wife has just started back to work, so they are now in a position to start making payments, again. So that’s a good thing.
I’m writing this post to bring to your attention “predatory lenders” and how they prey on good people’s misfortunes. First, these folks have no other debt except their house, which has a mortgage balance of approximately $170,000, including missed payments and a prepayment penalty. Fortunately, the Lender has not started foreclosure proceedings and have not tacked on Attorney fees, yet. When I walked in today, the first thing the Seller started telling me, was how he was working with a different Lender, to see about refinancing his house, to “help” him out and how they should have an answer for him in 3 weeks. With this is mind, he only wanted me to list the house for 3 weeks, if I could sell it before the loan came through then good, if not he would take the loan being offered. Well needless to say this did not appeal to me and my immediate thought was to just give this guy some quick info, politely bail out and leave. But I couldn’t do it. He was very stressed so I decided to get some more info from him and see if I could give him some advice.
Well to start, his house is only worth $245,000 to $250,000 max. It turns out, the lender that is willing to “help”, has told him that he can do a loan for 65% LTV based on an appraisal of $300,000! And will only charge him $10,000 in closing costs. Now if you do the math, it means the Seller will have a new loan balance of $195,000 and after paying closing costs MAY get a check for around $13,000. His current payment of $1,400, that he can’t afford, will go up to $1,500 (this is what the lender told him). Now what is wrong with this picture? Well first, how can a house appraise at $300,000 that is only worth $250,000 max? FRAUD. How can they quote him a payment of $1,500 on a high interest loan of $195,000? LIAR. How long will this Seller be able to make payments before he is in foreclosure again? SAD.
Now being the good little Realtor that I am, I pointed this stuff out to the Seller. I explained to him that they are ripping him off and if you take them up on their “help” you will be digging your hole deeper. I also explained to him that his current lender does not want to take the house back. I suggested, that if they are now in a position to start making payments, then they need to contact the current lender and negotiate a loan modification. Since he has no other debt and has a legitimate reason for his financial difficulties, there is a better than good chance, that they can work it out and keep their house. I could actually see the glimmer of hope come into their eyes. They have been buried in stress and have been getting letters from “sharks” everyday wanting to “help”. They did not know they had other options. They don’t want to move. They love their house and just want to get beyond the financial hardship.
So folks, it was a great listing appointment! I did give them some info on selling but really do not think they need or want to sell. I told them if things don’t work out with the bank, then give me a call. I will be there for them.
They both walked me out to my car. Mrs. Seller gave me a hug and asked me for a stack of business cards. And Mr. Seller was really excited and pumped, about having another option, instead of selling or refinancing.
Folks, I’ve said it before and I will say it again, “Real Estate it about people, not money” As Realtors and Lenders, we can make a difference in people’s lives. Make it your goal to listen and to give sound advise. I left this listing presentation with my sign in my car and a smile on my face. To me, that’s priceless!