West Palm Beach, FL (PRWEB) October 18, 2008
Investors seem to be asking the same question: "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? As an investor, I'm not interested in buying more time in the property. I would let them foreclose, but I don't want the bank going after my other assets."
"The threshhold decision is one of common-sense business, not legal." says investor / landlord Hilton Wiener, who also happens to be a realtor, CPA and a New York lawyer, now living in Florida.
"If you are "losing your shirt" and the kids are near starving, you have to make a decision- keep paying or not? What is your 800 credit score really 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 advising one to not "throw good money after bad," It's as if these investors are in a "drug addicted" state. They must wake up and start taking control of their lives. You've already lost the investment money. The parcel of land/ house/ condo already has zero value. I find it painful to sit by and watch people literally destroy their lives on top of it."
Wiener had interviewed several foreclosure defense specialists before deciding to bring his clients to Ticktin. "We find that many owners are prepared to take the credit hit, if necessary, 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 for up to 20 years." There are two alternatives that are always discussed: a short sale and a deed in lieu of foreclosure.
Short sales are the new rage among realtors. "Investor friends of mine looking for bargains have been on the buying end of short sales for years," says Wiener. But what are you, the seller, getting out of it? Other than the problems of getting a viable offer and then selling the bank on accepting the offer, and making sure they still don't demand the deficiency, and all this before the buyer backs out of the deal ... it's easy. And if you ask the bank to just 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 (which is the reason the short sale makes sense, say its advocates (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 for a couple of weeks, and Realtors. And the Realtors are usually just receiving their information in turn 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 had actually loaned its OWN money, it would just take back the property and get it over with, in a heartbeat! But the bank has typically packaged and sold the loans to investors. "Let's put it this way," says Wiener, "I have a friend who is a very large hard money lender. When his borrower stops paying, he either modifies the loan to payments that are affordable, or he immediately accepts the deed in lieu of foreclosure. He is actually willing to pay the borrower ten grand for the deed just so he doesn't have to foreclose. (This is where we can have the discussion about the reasons for the mortgage meltdown.)"
Stop asking the clerk at the bank what they will accept. The Ticktin Law Group will fight the mortgage company, not with the goal of delay, but getting out and "stopping the bleeding." Once the bank no longer has its "stick" of threatening to hurt your credit, you will put yourself in the driver's seat.
The firm does not charge its standard monthly retainer for the investor workout but, rather, charges a flat up front fee and then a success fee upon completion. This arrangement is more in line with the objectives of the strategy.