This explanation for Short Sale - The Right Thing to Do, is a continuation of a discussion off our page Short Sale My Home St George Utah.
As such this is page is for those who are having a hard time justifying a short sale on their own conscience involving the morality of meeting one's obligations in seeing ones mortgage through.
You may feel isolated in not knowing particularly the 'right thing to do' or for others, let alone what to do. Some, in other words, have their own version of principles involving not letting themselves easily into doing a short sale, knowing that they are just 'passing the buck', so to speak, of their "own hardship" onto somebody else, or in this case to the bank(s) that trusted a loan to them. This is normal to be hard pressed to understand the right answer. Believe me, many others have no problem ridding themselves of a lesser hardship.
Just because I am one of the more conservative ones, as I've tried to put myself in peoples shoes, I've tried to pursue some ethical dilemma thinking if your interested
Perhaps because I see enough people doing them, and in being highly conservative myself, I have often wondered how to guide others. I am able to stay objective and more honest to say, aloof, in this process by referring you to my intermediary to speak with him. However, often people come away really appreciating being able to talk to the specialist that sees day in and day out other hardship situations. Quite frankly it is nice to know about your own situation, qualifying or not, in light of those, and as to whether it is even doable. It is wise to explore options, trust me. It is so you do not undermine your financial base, having waited too long.
I'm about as conservative as they come, but would see that as a limitation towards planning ahead. In other words, if you can foresee that you are going to be doing a short sale anyway, there is something American about doing it before your entire financial situation becomes too compromised. If your are still wondering, like I would be then, back when I had a harder time with these, I did write up some information about Personal Ethics and 'The Right Thing To Do'. Again, I do not standardize this to anyone, but I share it to be helpful toward those who might need encouragement in highly distressed situations and are finding it hard to justify it with their personal ethics.
The following real life example will bring out some dynamics involved to evaluate possible "holding tight to a sinking ship" or when it might be a good time to "Let Go and Let Short Sale". Ha, ha! Now that was funny, you got to laugh. OK.
I'll start with one example involving a call I had from a nurse in Arizona who had a while ago job transferred he and his small family out into a more remote area that allowed him to work as a nurse in an area that suited him nicely. However, he has begun to realize that it was not the best situation for his wife at home with no neighbors or social life. Well, we all know that a "Happy wife is a happy life" right? So, he was yearning occupationally or a transfer opportunity back up to Salt Lake, Utah. However, he could not make it happen with this other extreme burden he had been shouldering- namely a home he is upside down on in the St George area for over a year now. It was his home while he was nursing here in the area, before he was transferred in his work to Arizona. He did not 'feel right' at that time in just unloading the home in a short sale process although it was presented as a viable or doable option to him all along. So, he put a renter in it and was taking a $450 per month loss for the last one year. He says that it is becoming a real strain to make ends meet and to foresee having enough money to be able to even move to Salt Lake, Utah. He says his dad thinks he should 'cut the strings' to the home and Short Sale it. Dad thinks he has paid enough of his debt to society in 'hanging onto it as long as he has'.
I could not tell him at that time what was the right thing to do for himself. I sincerely believe that it is not my place. However, I could give him my feeling that I think his dad could be right. 'Hey, you have tried to make it work and it is draining your financial reserves, your base of operations, and in your home situation becoming increasingly stressful enough to even be able to survive, let alone warrant a move'. Additionally, he was upside down enough in his home for his situation for things to perhaps look more and more unrecoverable. I admire how far he took it and I have thought of him as a basis for my own standard and perhaps it can help you judge or 'let go at that certain point'.
They had done all they could to make payments for over a year, besides on another home, at a $450 per month loss to themselves. He had exacted and 'manned up' to a high consequence for getting himself into such a mess or just of plain old misfortune... still he did not want to pass it off onto somebody else. However, his family situation and financial situation started to de-compensate, limiting his freedom to see a way out or how his situation could ever improve, leading one to believe the nature of his situation, of it becoming more and more unrecoverable. I now continue with a rational and basis and a case for Short Selling ones Home being the Right Thing To Do.
I want to start off by putting a plug in for a REALTOR®. Did you involve a REALTOR® when you bought the home in the first place? During negotiations, a REALTOR® will help optimize your offer by showing you several properties rather than having you grow starry eyed over just one property to where you'll believe just about anything you want to hear about the high purchase price being "a good buy". Oh, yes, I think the general public, in a mass, all applied to that incremental increase in score card prices that justified it, did we not.
Another mechanism of protection and advise is built into getting a loan on a house, when prior to closing on a home, a professional appraiser is sent out to appraise the homes value to make sure the risk the bank takes is not too great a one financially for themselves.
At any rate, a case can be built, generally speaking, that if you are not the succor for your loss, and true misfortune has happened your way, perhaps that is why we pay PMI or mortgage insurance, so that the more 'risky situations' can be covered with the bank taking the loss. Perhaps PMI is not involved in all our short sale situations, so as to have covered it. Yet, I am building a rationale to where, eventually, when with genuine hardship, at some point you may decide that you've paid your share of the burden, enough to pass it off onto the rest of us, the tax payers, as "that insurance policy".
Now, you'll remember me saying that I cannot speak for others situation. However I can say that I have met many, many people who feel just so ever sympathetically and emphatically inclined to feel for all the poor distressed and displaced homeowners that we have in America right now. And yes, I do believe many of them would be willing to consider how their own taxes could help alleviate or pay for a share of that burden, after all that can be done on the individuals part.
Ethical Consideration Criteria for Doing a Short Sale
Now, in many cases a short sale gets necessitated by a move. When there is personal options not to, still some uneasy stressful cases for being able to continue to make the payment can exist. For me, I probably would have to first, either be unable to shoulder it financially or have an almost unbearable or unrecoverable situation. Family is a pretty high priority and providing for that family. At some point, I might have to cave into that short sale process. I'd be pretty much doing what I could before passing on the burden elsewhere, much like the nurse in my example has done. However, there comes a time to think about preserving a base of operations if there is one to preserve yet. Might I add that I sensed he was starting to think about a short sale, justifying it in his own mind. I might also add that when thinking about the absolute margin he'd have to make up, hanging over his head, he was pretty upside down in his home.
There by, I think I've identified my three criteria:
- Financial impossibility or actual strain.
- A troubled family situation, due to economic strain.
- It is becoming more and more unrecoverable.
Going back to our example, I think as though he shouldered the portion he could, that is that he tried other options and then could tell, upon family duress that his situation would become worse or was pretty much unrecoverable.
It is a pretty difficult consideration for many with high standards who might have heard from their cradle on up, how grandpa or some important leader, had taught forcibly that your word is your bond and without it you have nothing, to now conclude that progeny is losing their own sense of honor by over-rationalizing in getting out of something one has signed in writing, 'a contract to uphold your end and to pay your mortgage payment'.
An Ethical Persuasion for Doing a Short Sale
Basically, it is not your fault that values got inflated so much higher than they really are. But can we really believe that? After somebody telling me that it is not, I'm easier to consider it as true. This is America and we were partaking of the spirit of entrepreneurship, but yes we did get high minded thinking our houses could provide more than their function, as a basis for an investment. As the central resource of wealth building, lending practices got out of hand, many buying into the adjustable interest rate trap. When those rates jumped, people that could not afford to pay the higher interest rates or to sustain them, defaulted or are in a default situations now.
Also, did you know that in many situations when the bank is required by you, the homeowner, under duress by legal representation, to 'provide the Note' showing they own the home, they cannot do it in too many instances. It's because they've been left as the servicer of the mortgage, even though it was sold to somebody else. Then it got sold again and again, possibly too many times. Now, the Note just is not to be found, partly because it was made too easy to transfer the ownership. All of this was to pad the profile of high minded investors portfolio's looking to add clout to bigger investments, by "padding" or "inflating" their "worth" by owning a bunch of home loans that pay out three times their worth. Wait a minute, but AFTER 30 years, not before, would be the honest mans claim. They were getting face value earlier on in the process, adding to the multiplier affect of being able to do more and bigger and more lucrative deals. The high minded investing was going on, on a much larger scale also, while we were participating more honestly, without government regulation. In fact, for all we know, it may have even profited them as well, when doing more loans.
All this adds to the ethical persuasion of perhaps realizing a time when a distressed owner could look at an ethical basis for doing a short sale when at the end of their ability to continue making payments and "clutching and grabbing at an already sinking ship". One may also decide based on a worsening situation to cut the losses in favor of preserving ones own working situation to be able to continue to provide and to add to that tax base as well.
If you are exhausted enough to think the criteria apply, don't wait, call me now. I'll refer you to talk to Andy, my short sale specialist. I'm at (435) 674-3600, Brian.
However, I think I've presented a case for when it might be the appropriate and the right thing to do when in true duress. I hope this helps somebody, as it is my imagination at work only- I have not suffered like many have through this kind of an ordeal.
Please feel free to email me with your own thoughts and if this has been helpful or not at: [email protected].
To get back to the prior page, that this page came off of, you can go here Short Sale My Home St George Utah.
Remember, the short sale specialist I have teamed up with is second to none, and I pay for it out of my commissions. He does what he does well and I do what I do well. Call us he you need help selling a short sale.