This past week I received a disturbing call from a woman in financial jeopardy. She held a note on a property that was in foreclosure. The property owner had tried and failed to sell the home and was not responding when she tried to call him. There were several lenders ahead of her, and once the property foreclosed, she would lose her investment. She had three options, and none of them were good.
The caller had spoken with an attorney already. When she called me, she was looking for another opinion on her options. The first option was to pay off the delinquencies and get the loans current. That was only going to put her deeper into a hole, throwing good money after bad. The property owner would likely continue not paying the mortgages, and she’d just end up in the same foreclosure situation. The second option was to go to City Hall on the day of the foreclosure with cashiers checks in hand and try to purchase the property. Similar to the first option, this was throwing good money away because the property wasn’t worth what she’d be putting out, and it’s not like she wanted to own the house. It sounded like the loan she had granted was a favor. She should have considered Shakespeare’s thoughts on the subject before committing herself, “Neither a borrower or a lender be.”
The third option was the walk away and get nothing. I advised her that was the best option, a conclusion she had already reached but just needed to hear from someone else. She told me that she had learned her lesson, and wished someone had educated her on becoming a lien holder before she committed tens of thousands of dollars. It reminded me of something I once heard, “You know what you get when you don’t get what you want? An education.”
I have an education, an MBA from San Francisco State University. When I first became a Realtor in 2004 I wanted to help people in foreclosure. It wasn’t until 2007 that I began representing sellers in default. From about 2007-2009 I sold a lot of short sales, then I transitioned to selling bank owned properties until 2013 when most of the bad loans had worked their way through the system. I still did a few short sales along with the bank owned properties (REOs – Real Estate Owned) but I preferred representing banks as opposed to people in financial crisis. It’s a lot harder dealing with people losing everything than it is dealing with banks taking a haircut.
I feel bad for the woman who was about to lose her entire investment. But I have to wonder, are we going to see more situations like this as the worldwide economy deteriorates? Credit card spending is out of control right now. Gas prices are sky high and they are fueling inflation throughout the economy. Food prices are projected to rise because fertilizer isn’t getting through the Strait of Hormuz. People are suffering everywhere. Blame any politician you want. It really doesn’t matter who you blame. What matters is, who is going to fix this mess?