Short Sales in Santa Clara and San Mateo Counties Up

Short Sales is the way out for a borrower-home owner to get out of the foreclosure tragedy permanently – this is what outwardly believed by people caught in the foreclosure crisis. But in real life experience, a Short Sale is a tug-up war between the borrower and lender and sometimes including the second mortgage holders.

Here is an example in San Jose – came to light recently. A former nurse, after losing her job and paying the mortgage promptly from her savings, wanted to exercise Short Sale option for her condo in a beautiful location of San Jose. During March 2009, she listed her property for $249,000 – less than the price she paid four years back, namely $435,000 – and less than what she owed to the mortgage lender.

To explain the Short Sale procedure – it is a complex one. If the lending bank holds the first lien, it would be fairly easy in the sense that you get the approval in months. But this is not the case mostly. The mortgage is owned by investors through securities and the lender is only servicing the loan or collecting the monthly payments towards the loan. The stipulation is all the mortgage lien holders should approve the Short Sale.

Generally the lenders are reluctant to come forward to grant their approval to Short Sale application – the obvious reason being losing money out of the “forgiven” amount in a Short Sale. Often times there are many excuses – like in the San Jose case above – the concerned document file was “missing” more than once – there was switching of computer systems in another.

The foreclosure process has already begun in the meantime, through a Trustee Sale public auction and it was postponed for four times, since the borrower was “waiting” for the lender’s approval.  The mental agony of the individual, opting for the Short Sale route, needs no elaboration. Finally after a delay of 11 months, one buyer family clung on their offer considering the location of the said condo and bought it four weeks ago.

Despite all these, statistics reveal 23 percent of home purchases in Santa Clara County and 12 percent of total home purchases in San Manteo County in March were Short Sales – up by comparison to last year.

Posted by Amitesh Kumar on May 7 2010. Filed under Housing, Short Sales. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry