During the height of the market, many purchased multi-family properties meant to serve as an investment in their future. Unfortunately, with home prices at their peak, these “investments” often proved to be the opposite…
10 years after purchasing a Bridgeport, CT multi-family home, this seller found himself with a property worth less than half of what he paid, dealing with troublesome tenants, and consistently paying losses on the home every month.
He had spent many years waiting in vain for the market to recover, hoping to be able to sell the property and be rid of his bad investment. Bridgeport has seen one of the worst fall outs from the housing crash and has never seen anything remotely close to a full recovery. When the over leveraged home became such a liability that no lender would give him a mortgage to purchase a new home to live in, he decided it was time to take action. He decided to cut his losses and attempt to short sell the property.
Our client faced a tougher short sale for two reasons:
- He had never missed any payments on the property
- He had a good deal of savings (though not enough to pay the loss)
Short sales with clients who are current on their payments and who have assets can be particularly challenging.
Lenders always scrutinize these sellers financial documents much more so than those from sellers behind on the mortgage payments. Lenders are also highly likely to ask for seller contributions or promissory notes or simply deny the short sale altogether.
Ultimately Citibank came back requesting the seller sign up for a large cash contribution and a promissory note of $70,000 payable over ten years!
Negotiations followed, with Citibank finally agreeing to approve the short sale and waive the deficiency in exchange for a $2,000 seller payment. Bank of America (holding a second mortgage) quickly followed, agreeing to fully forgive over $30,000.
A few weeks later this Bridgeport, CT short sale closed with the seller finally free of his burden property and with over $100,000 of negative equity fully forgiven!
Last Updated on December 5, 2019 by Minna Reid