Jul 01, 2008
The Mortgage and the Short Sale: A horror story in three or more acts
01 Jul 2008
Posted by Andrew Kantor
[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.
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.
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.”
“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.”
[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.