The Mortgage and the Short Sale: A horror story in three or more acts

[This is a true — and ongoing — story. Please note that it ONLY reflects the opinion of the author based on his experiences and NOT that of the Virginia Association of REALTORS® or any of its staff or affiliates.]

 

I have this house, see, and I want to sell it. Have to sell it, actually — I don’t live there anymore. But I’m getting some interesting lessons in short sales, real estate law, and lender incompetence in the process.

It’s like this: We own a house in Roanoke — I should say I own it, because my wife’s name isn’t on the deed. Anyway, I lost my job when the newspaper I worked for decided it didn’t need this technology reporter anymore. Luckily, my wife was just about to accept a kick-butt job in Richmond. So we moved and rented a house in “The 804.”

Therein lies the problem: Until we sell the house in Roanoke, we’re paying mortgage and rent. That’s tough on one income, and until my freelance writing gets off the ground, that’s what we have.

So scratching my chin one day, I checked out the Web site of my lender. (Let’s just say its name begins with "N" and ends with "ational City Mortgage.") Lo and behold, there was a link, “Having trouble paying your mortgage?” Ah, I thought, maybe they have some programs to help us reduce payments or something.

I had several options, the site explained, depending in part on whether I wanted to keep or give up the house. Step number one: Fill out a form detailing my financial info so they could tell me what might work.

I did this. The form asks for a listing of my income and my expenses, what the house is worth, a copy of the listing agreement with the REALTOR®, etc. Simple. I awaited a response.

I didn’t get it. Instead, a couple of weeks later, my REALTOR® called to say that National City had called her. “Are you short-selling your house?” she asked. National City wanted to get an appraiser in, she told me, and was prepared to take 83 percent of the loan in a short sale.

“Huh?” I said. At that point, I had no clue what a short sale was. Was this some sort of scam? All I did was fill out a form asking what kind of programs I might be eligible for.

But wait, there was more. My REALTOR® told me that the National City rep had given her plenty of info […]

about my financial situation, and even mentioned getting me an FHA loan.

Mood: Confused, moving into angry.

Left hand, meet right hand

I called National City, naturally. I tossed around terms like “Gramm-Leach-Bliley” and “Fair Credit Reporting Act” willy-nilly. Why were they disclosing information to my REALTOR®? Why were they trying to short-sell my house? What the bleep was going on?

The response? Well, it varied.

The first National City person (“Mrs. Beasley”) told me that, although the form I filled out said it was just an application for financial help, in reality it was starting the short-sell process. Perhaps it was printed in invisible ink. I’ve studied the page and the form — it never even suggests that.

I explained to Mrs. Beasley that I didn’t authorize a short sale, didn’t know if I wanted to do that, and didn’t know what my other options were. That’s why I filled out the form.

I convinced her to stop the short-sale process while I gathered my wits. But my first stop on the train to sanity was to e-mail National City’s ‘elevated’ customer service address and complain. Traditionally, when one fills out a form requesting information, one, you know, receives information.

The next morning, lo and behold, National City calls me back and clears things up… a bit. The form I filled out, the ‘elevated’ customer service rep told me, is automatically routed to the ‘short-sell department,’ but no — they weren’t going to short-sell my house.

And the request to get an appraiser in? That’s standard procedure, she said, no matter what I choose to do.

All right, that’s making more sense. This customer service rep offers to send me what I wanted in the first place: a list of options.

Soon, though, I get a call from “Ms. Dodge,” the National City rep who had spoken to my REALTOR®. And she gives me a completely different picture.

Of course we started the short-sell process, she said. It’s the only option you have. You see, when National City ran the numbers, it decided that the only option available to me was the short sale, ergo, it began the short-sale process with an appraisal.

“I thought that every process starts with an appraisal,” I said — that’s what the ‘elevated’ customer service rep told me.

Nope, that’s not true, Dodge said. “We only use the appraiser for a short sale” which is what they thought I was doing.

At least now I know that no one there is entirely sure what’s going on.

Then Dodge and I took a left turn into a cross between the Twilight Zone and Catch-22.

The outer limits

Why, I asked, was a short sale my only option?

The answer: Based on the information I gave them, National City has determined that I cannot afford to make payments on the house. (This is despite the fact that we haven’t missed a payment and don’t plan to — it’s tight, but very doable. But because my wife’s name is not on the deed, they can’t take her income into account.)

Then the kicker: Because National City thinks we can’t afford to make payments they will not offer us any kind of assistance.

In order to get assistance, we first have to prove that we can make the payments.

Yes, you read that right. ‘We cannot help you until you prove you don’t need help.’

“Isn’t that a bit backwards?” I asked. “Shouldn’t you want to help me because you think I need help? Can’t I say, skip a couple of payments and roll them into the mortgage? That would help a lot.”

“Which payments do you mean?” Ms. Dodge asked.

“April or May?” I suggested; we already made the March payment.

Nope. They won’t change my loan or offer any help until I miss the payments, get the nasty foreclosure letters, take the credit hit, etc.

I am beginning to understand why National City is in financial trouble. I’m also beginning to understand what happened when I sent in that form. Based on its policies and the information I sent, the only way National City is willing help is by doing a short sale. Thus it began that process by calling my REALTOR®.

During all this time, though, my freelancing started taking off and money became less of an issue. But if we could short-sell the house, darn it we would just to get it off our backs.

Decisions, decisions

I spoke to a real estate lawyer and with my REALTOR® and obviously my wife. We decided that a short sale was the best option all around. I had already filled out all that paper work, so I called National City to restart the process.

We also decided that, in case we wanted to take advantage of some other National City program, we would stop making payments — that way we’d be eligible for assistance based on its twisted logic. My credit would take a beating with a short-sale anyway, and in a few years every Tom, Dick, and Harry will probably have missed mortgage payments on their credit reports.

National City, of course, wouldn’t simply restart the process with the existing paperwork. I had to do it all over again — fill out the same form. Fine, fine. I did.

A few days later, I received a letter from National City asking for “additional information.” What additional information? The same stuff that was in the online application. They don’t want additional information; they want the same stuff yet again — address, income, etc.

I took this opportunity to hook up Ye Olde Modem so I could fax them documents. Proof of income? Ain’t got any — that’s kinda the point. (My wife’s doesn’t count because her name’s not on the house.)

So I fax National City the same information one more time.

This time it sunk in, and the company arranged to have that appraiser check out the house.

Time, it passes.

A French comedy, without the comedy

A few weeks later I get a call from my REALTOR®. National City called her to say they wouldn’t accept a short sale because the house appraised for more than the remaining loan.

Now remember, the house has been on the market at a price that will just cover the remaining mortgage (plus REALTOR® commission) and hasn’t sold. So whatever appraiser National City used, he is clearly from Another Place. I wanted to say, “If you think you can sell if for that much, why don’t you take the %$#^&* thing?” I restrained myself.

The good news, though, is that, while we waited for the stone-age gears at National City to turn, we decided to put the house up for rent. We got a ton of interest. More importantly, we got a renter, and his rent will cover the mortgage. So we can wait out the market till it improves.

No short sale? Okey doke. Let’s see what the alternatives are. Worst case scenario, I’d just have to pay about $5000 to bring the mortgage current.

I call National City and say ‘Now that I’ve missed several payments, what options do I have?’ (Remember, I had to miss payments before it would consider any kind of assistance.)

The answer: I had to fill out the same paperwork yet again, then wait for a reply.

You have got to be sh— er, kidding me. You already have it. Twice — no, three times. Sheesh.

So I do it; luckily I have all the PDFs and only have to change the date. I faxed them in the first week of June. And wait.

Time-traveling paperwork

On June 12 or 13, I get an envelope from National City. Seems the company needs more information before it can process my request. What more information? The same form I just filled out. I mean that: It’s exactly the same form. It’s déjà vu all over again.

That’s right: Once again, National City wants me to send it another copy of the same thing I just sent. Incredible.

On June 16 I call and suggest that they just open my file, take out this piece of paper, and copy it.

“That’s OK, sir. You’ve been approved.”

Huh?

“Were you planning to tell me?” (Yes, I actually said that.)

“A letter is being sent. It should arrive in seven to 10 days.”

“So you don’t need the paperwork you requested.”

“No.”

[sound of head thumping against desk]

But wait. There’s more.

Four days later, on Friday, June 20, I receive the information packet from National City explaining my new mortgage setup. It’s dated, somehow, June 6. And it says that National City must receive my reply by Monday, June 23. Not postmarked — received.

Once again: Incredible. Once again: the sound of my head hitting the table. It’s like some sort of sick game. No matter who you call, you’ll get different information. And paperwork seems to disappear into some sort of administrative black hole. (Maybe a wormhole — it might be reappearing somewhere or somewhen else.) Oh, and things are mailed out from Columbus, Ohio, and somehow take two weeks to reach Richmond.

So now all the paperwork is in, the mortgage is back on track, our renter is paying rent, and things have stabilized. Well, for the moment. Because, I realize, with National City you never really know.

About Andrew Kantor

Andrew is VAR's editor and information manager, and -- lessee now -- a former reporter for the Roanoke Times, former technology columnist for USA Today, and a former magazine editor for a bunch of places. He hails from New York with stops in Connecticut, New Jersey, Cincinnati, Columbus, and Roanoke.
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12 Responses to The Mortgage and the Short Sale: A horror story in three or more acts

  1. Jeremy Hart says:

    Tell me this is a July 1st joke. I had to read this three times just to get the timeline correct. I’ve only done one short sale, I was on the buyer’s side, so I didn’t have the – ahem – pleasure of seeing the seller’s side in action. Thanks for the laugh, although I know it hasn’t been funny.

  2. Sadly, no joke. It’s really happening, although I hope it has finished happening and has now simply happened. But we’ll see.

    And you should have seen my face when I got that predated letter on Friday June 20 requiring a response by Monday the 23rd. I said some bad things, not all under my breath.

    And for what it’s worth, all those quotes are verbatim, or as close as I could get.

  3. Tony Arko says:

    Andrew, did you see #5 on my list? I have been through it with several different sellers and several different banks. They are all the same. They answer to no one, they don’t care and they have our money. Banks suck.

  4. Well…. after I went blind reading this…. I could say that it’s not very different than most of the stories I’ve heard. The lenders are going about unbridled saying how they aren’t in the business of selling real estate…. Well, they sure are acting like it. They aren’t doing a whole lot to work with anyone and are doing even less to remove the blinders about how their inability accept the current market is just making it worse on them and everyone else.

  5. Jim Rake says:

    Ditto…to all. And, won’t get fixed until it’s mandated (standardized procedures & coordination between bank and realtors) by the legislature. But, as Lem informed me, by the time they “woke up” to the problem, the problem (short sales) will be over, according to him, 12-18 months.

  6. It’s more than just the coordination between bank and Realtors — it’s companies like National City having basic, functional customer service/CRM systems in place. There was absolutely no need in 2008 for me to have to send and resend the same forms that many times, and for company reps to each give me different information.

    I left out the whole phone thing. Every time I call, I first have to go to the main customer service department. Even though I have to enter my mortgage number, I still go through the same thing every time.

    I wait for “Hello” and rattle off:

    “Hi, my mortgage number is 3456789. My name is Andrew Kantor. My mailing address is 1734 Main Street in Richmond. The phone number is 958-3331, and no, I don’t have any other number. I’m calling about my workout package so please transfer me to that department.”

    Then I’m transferred and have to repeat that whole spiel verbatim (minus the last part). So every call I have to give my mortgage number three times, and every call I get information that is likely incorrect or outdated.

    It’s a bit of a stressor. I’m thinking that for my next mortgage I’m going to ask for a clause in the contract that it is not to be sold to National City.

  7. Jim Rake says:

    Andrew – when they fail to accomplish even the simplest of business practices, “because they can”, you don’t leave them that choice. Oversight and its requirements would not only standardize and improve the process (yes, strict guidelines set down by the legislature in dealings with any short sales – and, by the way, there are bank practices/procedures that must be done), but would establish a pattern for future use, the next time this cycle hits. Let’s just hope that’s after we’ve given up Real Estate for the good life.

  8. Julie Emery says:

    Sometimes I think they live in an alternate universe. Seriously! How can they continue to proclaim that they’ve got this thing under control, they’re helping consumers work things out and there’s no need for any “interference” from any government body?

  9. Cindy Stackkhouse says:

    I wish I could say this is not normal…but it is all too normal with short sales. The biggest problem is lack of systems at the banks and they get paid 9-5 whether they solve the problem or not…it is the homeowner that suffers. If you get impatient with one clerk…it goes to the bottom of the pile and you start over. And don’t even get me started with what happens to a potential buyer of a short sale. Now that is torture for everyone. Have a nice 4th!

  10. Claude Labbe says:

    Two thoughts, neither of which are very hopeful.

    First, National City as you describe is not an anomaly.
    Second, you know this will likely be much less smoother by the time Congressional action is taken to make things look pretty before Nov 2008.

    At least in your case, the consumer and the lender were able to move away from the situation with a positive outcome.

  11. Lynn Pollock says:

    Wow.. it’s ironic to find this story online. My husband and I have National City and could almost write this EXACT story (I’m a freelancer, too).. we got behind one payment and they wouldn’t take ANY payments without bringing it current all at once or filling out a work it out package… low and behold.. by the time I dealt with their brain challenged customer service, filled out a work it out pkg three frigging times, and almost had a nervous breakdown deailng with their stupidity, we had the VA step in (the process started OVER) and FIVE MONTHS LATER we had a payment arrangement we couldnt afford but gosh forbid we imply that because then they’d step in and sell it out from under us. Losers. Customer service should be on an endangered list somewhere.. were now paying an extra $400 each month for the next 9 months.. all for getting one month behind and then “figuring things out” taking half the damn year… gotta lot big business.

  12. Dave says:

    I have the similar issues with ASC aka Wells Fargo. They have lost my paperwork several times. We bought our home in Michigan in 2004 for $217,000 and are now trying to short sell for $135,000. We had a buyer at $165,000 about five months ago but the Wells Fargo waited over 60 days for a decision. You’d think they’d want to get the maximum amount of money.

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