Sherwood Short Sale Case Study #9- Divorce
When is a short sale really a short?
Location: Owner Occupied Property in Sherwood, Oregon.
Total owed: $320,241 on Bank of America formerly Countrywide 1st Mortgage interest only.
2nd Lien owed $103,682 on Washington Mutual
This short sale transaction came to us from a real estate agent not wanting to get involved. She attended one of our short sale seminars but wanted nothing to do with it. She was friends with the wife and it was a divorce case. It was a little too close of a relationship and the seller wasn’t comfortable with her agent friend knowing her financial situation. I told her “No Problem We deal with these divorce cases all the time. After pulling title I see why she was running from this transaction…”
We ran the preliminary title and saw back property taxes and a nice attorney lien for $4500. The Husband Mark was very helpful and wanted to take care of this dilemma right away.At first glance I was excited to refer the listing to one of my preferred listing agents Jeff Knipe. We have a solid working relationship he has his role and knows mine. He is patient because he works several short sale listings. A couple of issues had come up and multiple plates were spinning:
1. 1st mortgage was behind 8 months but never filed notice of default, very strange!
We paid the 1st in full and got back property taxes current, got the ex-wife’s attorney to settle for less on his bill. Reviewing my notes I could have saved a ton of time by reviewing the mortgage payoffs and comparing to line 504 on the estimated HUD a little closer. It still comes down to what the appraisal/BPO valuation. In this case they told me $365,000 and the First wanted to be paid in full and kept declining the short sale. The challenge was counter offering the buyers up $10,000 when their original offer was $349,000.
2. The 2nd lien some cash was taking out during a debt consolidation and was charged off already but lien still on title.
The 2nd Lien holder accepted $10,000 to release the lien and fished it out of the discharged department. They unfortunately want to pursue deficiency after the fact. When it turns to judgment maybe we can go back in and negotiate down to reasonable amount.
3. The Ex-wife was living in the property rent free but was not helpful for entry during showings.
4. Ex-wife’s attorney bill was on title.
Time, patience and leverage…The husband offered to pay $2200 of the ex-wife’s attorney bill just to get her to pack up and move out. The bigger picture is hard to see when you are in the moment in divorce cases. She agreed it was the best thing to do for her and the children. Attorney pursued the remaining balance on the ex-wife as garnishment.
So here are the final numbers:
Final Sales Price $359,000 Buyer’s very happy with a beautiful home in Sherwood.
1st Owed $321,366 He owed $304,000 when I met with him but arrears piled up. PAID IN FULL.
2nd Owed $103,000 Accepted $10,000 TOTAL DISCOUNTED LOSS ($93,000)
Attorney Lien $4500 Accepted $2200
Back Property Taxes and HOA’s now current Total $9740
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