Getting a Short Sale Processed

I began a short sale in late spring of 2009. Since then, we have received a total of 3 offers on the property. Two were flat out rejected.

Here is the story on that second offer... Buyers toured the property with their agent. Agent contacted me about making an offer. I told them that based on my conversations with the lender, an offer of $250K would work. I let the agent know it would be best to put in a full price offer, which the buyer's did.

After a couple weeks of waiting, I call the bank only to find out that the offer was rejected. They didn't even bother to counter!

In the meantime, the lender contacted my client, the seller, and offered a modification. Basically they would forgive the 5 payments that had not been made and lower the interest rate permanently. Now, that sounds like it could be a good deal but let me tell you why in this case it was not.

The home was worth $400K at the peak of it all... Now we were struggling to get an offer of $250K. The homeowner's property tax paperwork for 2009 shows the assessed value at $280K. The homeowner naturally made this known to the bank and suggested they lower the principal owed. No go said the bank.

"But wait a minute," said my seller, "You are willing to sell this in a short sale to someone else for less than what I owe. Why can you not sell it to me at that price?"

Naturally the answer is that banks don't want to encourage irresponsibility. They don't want clients thinking they can get away with buying a home for one price and then renegotiating later. Now, isn't that what's happening higher up the chain?? These lenders are asking the Treasury for a bailout, an "injection", an "infusion." Call it what you want, they certainly have no problem asking for a break. But damn their clients if they need a break.

In this time of unprecedented financial turmoil, why is it not possible to reset home values, reset existing mortgages and move forward? Why has it become necessary to displace so many families?

I am happy to hear any explanations as to why this kind of solution is not an option. I mean, the banks are now willing to become landlords for goodness sakes! That means hiring property management, repair expenses since these are no longer the homeowner's responsibility... How can they offer a lower monthly payment when becoming the landlord actually increases their expenses on the property????