We had a short sale fall through because the holder of the second, Countrywide, wouldn’t sign off on the deal. Why? Because their appraisal came back showing the property worth about $25K more than the sale price. With the rejection, the property will be auctioned off on the courthouse steps in about two weeks.
It is highly unlikely that a buyer will be found in two weeks for this property for $625K. Why? Because there is unfinished construction – two rooms with stud walls and rafters still showing, subflooring still needed in the new kitchen, no cabinets, no master bed or bath sheetrock or fixtures and the house is still open to the elements in a couple of places.
So, what is accomplished by rejecting this deal?
- They are adding to the burden of a single woman homeowner with three children who lost her job as a result of the subprime meltdown. She is swimming as fast as she can and floundering trying to keep her life intact to some degree.
- They are hurting the neighbors because property values will suffer as a result.
- They are adding to the recovery time in the national housing mess because it appears that they are not responding in an appropriate manner to expedite these types of situations.
In our conversations with Countrywide, what we run into is unsympathetic, powerless representatives who cannot make decisions, who cannot take action. It seems that outdated policies implemented over ten years ago after the last mess and during good growth years are still in place.
I’ll admit to some personal bias toward Countrywide as they held the mortgage on the last house I owned and dealing with them as a result of a mail glitch and a late payment was met with no understanding and empathy (given our current experience – perhaps this is a condition for employment).
And while I focus on Countrywide because of this short sale situation, I think the problem encountered with them is representative of entire the lending industry at present. What’s needed is for these big institutions to form leaner, meaner crisis management teams to handle these situations where power and authority is given to their agents to expedite these deals and help get this short sale and foreclosure mess cleaned up as quickly as possible.
These institutions are going to lose big bucks. There is no way around that. Pinching pennies on individual deals – no matter how it adds up – is not going to improve their bottom lines enough to make up for the ill will they cause by trying to minimize the damage. They should be focusing on how to help people and maximize good will while building the foundation for future business that will then pay the freight on what’s lost during this cleanup.
This particular deal and the decision made gains this particular lender nothing but bad press and negative word of mouth advertising – not from me and this post, but from the single mom, her family and friends who have a very personal story of hurt and tragedy to tell others about the big indifferent company that couldn’t care.
As I said, I’m no genius but I know that when people extend themselves to help others through bad times it usually results in increased business because it is natural for people to turn to people and companies who have taken a personal interest in them.