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Desperate Real Estate Investors: How Do I Stop The Bleeding?
By Hilton M. Wiener Dated: Oct 14, 2008
Investors and homeowners alike are being given loads of advice these days - by realtors and the bank - but are they really being helped or are they just getting in deeper? Why can't you just return the deed and get out? The question being asked by investors is: What are the alternatives when you realize you are seriously "upside-down" and can no longer afford to pay the mortgage? Is there an exit strategy other than walking away and allowing the bank to foreclose? What about my credit? Will the bank attach my other property? If you are "losing your shirt" and the kids are near starving, you have to make a common-sense decision. What is your 800 credit score worth? I will never suggest that you do not pay your bills but, let's face it, does it really make sense to go bankrupt "supporting" an investment - whether it be a house or a lot of dirt? It is hard to believe that people will blindly use up their retirement money or the kid's college tuition fund to further compound an already bad decision. It's much more than just not "throwing good money after bad," it's a question of waking up and taking control of your life. You've already lost money. I find it painful to sit by and watch people ruin their lives on top of it. As both an investor as well as an attorney/CPA/realtor, I find that many owners are willing to take the credit hit, but they just don't want any other personal exposure. They just want to return the deed to the lender but do not want the lender chasing them with a deficiency judgment for which the borrower may be personally liable. There are two alternatives that are always discussed: a short sale and a deed in lieu of foreclosure. Short sales are the new game. But what are you getting out of it? Other than the problems of getting a viable offer and then selling the bank on accepting the offer, and not demanding the deficiency, and all this before the buyer backs out of the deal . . . it's easy. And if you ask the bank to accept a deed in lieu, they can't say "NO" loud enough. Realtors will tell you that the bank doesn't want the property back (that's why the short sale makes sense, other than their commission, of course), but the lender inexplicably seems to make the short sale way too difficult. This dilemma is easily explained once you realize that all this advice (indeed 99% of all the articles on loss mitigation from the so-called experts) is coming from two sources: a clerk working in the loss mitigation department of the bank, and realtors. And the realtors are usually just receiving their information from the bank. Is there any surprise that this is all just one-sided information, spread as the gospel, from the very party you owe the money to, no less? The real alternative?: have an attorney fight the foreclosure and give the property back in exchange for no personal liability. This means using a litigation attorney that specializes in mortgage law and foreclosure defense. Tip: If your attorney asks the bank what they will accept, it's the wrong guy. Why would the bank just settle for the deed? Simple. When the lender forecloses, all it is doing is seeking to get title to your property. We are offering it to them up front - without a fight - which nowadays costs the lender over $50,000 on average per foreclosure and could take well over a year. In exchange, the bank is giving up the potential of getting a deficiency judgment (which they are not getting so quickly anyway). Given the time and expense, if the bank actually loaned its OWN money, it would
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just take back the property and get it over with, in a heartbeat! about the reasons for the mortgage meltdown.)
(This is where we can insert the discussion
Stop asking the clerk at the bank what they will accept and, instead, have a proficient attorney handle it with the bank's attorney. Once the bank no longer has its "stick" of threatening to hurt your credit, you will put yourself in the driver's seat. ### New York attorney representing real estate investors in contact deposit recovery, class action lawsuits against developers for misrepresentation and violations of ILSA and applicable state condominium statutes and investor exit strategies and foreclosure defense.
Category Tags Real Estate, Legal, Mortgage Foreclosure, Mortgage Foreclosure, Foreclosure Defense, Real Estate Investors, Short Sales, Deed In Lieu Of Foreclosure Email Click to email author Country United States
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