Active Rain June 30, 2009

Taxpayer Funded Stupidity in Westchester County

Most of my postings on short sales have a happy ending. This is not one of those postings. 

In late 2008 my office brought in an offer on a distressed, vacant property I had listed as a short sale in Mount Vernon. We did yeoman’s work. I listed it and one of my agents brought a string buyer. The client, a victim of predatory lending, was desperately trying to avoid a foreclosure. The home was listed at $219,000 after several price reductions. We were listening to the market. We had hardship. We had a buyer. The short sale package was sent to the lender, who summarily rejected the short sale. Their reason: The loss was too large. 

Now, sellers who don’t like the bottom line are a proverb. But the market is ambivalent about those issues. The value is the value. The offer the lender rejected was $180,000. 

The seller contacted the lender herself and was misled: The offer was $120,000, she was told. Yes and no. The net to the lender was 120k. The offer was 180. Back-payments, back taxes and other expenses eroded their bottom line. 

When the listing expired in January, she re-listed it with another company. I spoke with the other agent briefly about getting him the keys. He was a newer agent, enthusiastic and eager. He wasn’t fooling around, he told me. He was going to get this thing sold. I wished him better luck than I had. 

                                               South 7th

306 days later, after the price had been reduced to $170,000, I saw that the listing had been cancelled. It was relisted as an REO for $169,900. When the lender denied our short sale in 2008, we warned them that they would never get an offer as good as the one on the table. We were right. 

The bank will now be lucky to get $120,000, which will yield them utterly nothing now that they have kept a non-performing loan an additional year, paid the legal fees to repossess, and the property has been vacant & deteriorated another year.  A nice lady’s finances have been ruined, 2 listing agents have put blood sweat and tears into the vacuum of an ungrateful lender’s middle management purgatory, and the neighborhood still has a blighted property. Nobody wins. 

This kind of ineptitude is funded by our TARP tax money. Someone should lose their job over this. Mr. Negotiator, I told you so in 2008. 

Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City.