Short Sales: Everyone Cries

19May09

Foreclosure Next Exit SmallI’ve talked with hundreds of Florida homeowners who are behind on their mortgages, and have witnessed a full range of reactions: Anger, Fear, Guilt, Sadness, Panic, Shock, Worry, Resignation, and Shame.  But everyone cries. Yes, every one.

When I first began meeting with homeowners about doing short sales, I thought the stigma of losing one’s home in a bankruptcy or foreclosure no longer existed, that people were inured to it, indifferent. In fact, most homeowners who are behind on their mortgages are more than embarrassed; they are mortified. Some try to appear indifferent, or spout “They want this house? They can come get it. I don’t care! I’ll walk away!” But that’s a false front and it soon crumbles.  They DO care.

These are the kind of folks who have always paid their bills on time, especially the mortgage. Now they lose sleep, trying to worry a solution into being. They want to make sure the For Sale sign will not have a rider broadcasting “Short Sale”, “Foreclosure”, or “Pre-Foreclosure” because they are embarrassed and full of guilt. They don’t want the guy that waves hello from across the street every morning to think they’re deadbeats. And they feel guilty about potentially affecting the value of homes belonging to people they know.

Banks will not approve a Short Sale (where the property is sold short of covering the mortgage) simply because the house has negative equity (the house is worth less than the amount owed). To take a loss, they must be convinced that there are extenuating circumstances, which is why a hardship letter is one of the documents required by the bank as part of the short sale process.

This is where the crying starts. Talking about the difficulties that led to their current situation is tough for homeowners, and some cry in the telling, but writing it down makes even the most cynical eye well up in the process.  Owning a home is the American dream, a dream that is hard wired into our culture. The idea of giving that up is devastating.  I think writing it down means looking back and chronicling one’s own defeat.

And so they cry. Wouldn’t you?

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