Dave Smells A Rat
Kari and her husband are going through a short sale. The bank gave them a condition and asked them to bring $1,000 to the closing. They're $155,000 upside down. The offer is $77,000. Dave finds this odd.
QUESTION: Kari in Los Angeles and her husband are going through a short sale. The bank just gave them a condition and asked them to bring $1,000 to the closing. They’re $155,000 upside down on the house. The offer is $77,000 for the home. Dave finds this odd.
ANSWER: You owe $225,000. And they took it. They’re going to forgive you on the debt—all of the debt—except for $1,000. It’s just weird. A thousand dollars … that’s like an elephant stepping on an ant. What’s the point? A thousand dollars against $150,000? Are they just trying to make a statement here?
Yes, you should do it. If you can get rid of a $150,000 deficit for $1,000, you ought to do that every time, but it’s weird. It’s so weird because it does nothing. If you’re going to give up $149,000, why not give up $150,000? What’s the point? It serves no purpose. I don’t understand where they got this arbitrary number. That scares me for that reason. No, this is not common. It’s very uncommon. Now, if you owed $10,000 upside down and they asked you to bring $5,000, that would actually make sense. They’re eating some, you’re eating some. But $1,000 out of $150,000, what’s the point?
PMI (private mortgage insurance) is involved in the negotiation of the short sale because they’re the ones getting their lunch eaten, too. PMI is losing the money. PMI has approved this short sale as well. Otherwise, it’s not occurring.
I’m scared that when you get to this closing that you’re paying $1,000 down on the first payment where they’re expecting you to start payments on a repayment plan of this whole thing. You need an attorney. This is a $150,000 decision. You need an attorney to review this paperwork. I don’t trust this bank. It’s that weird. But if the net result is you have $149,000 forgiven because you brought $1,000, for goodness’ sake, take the $1,000 and do it. Absolutely. But that’s just so weird, it spooks me.