Sellers Missing Out on Thousands of Dollars Due to Bad Counsel?

Before I even begin to detail out a very common example, let be fill you on my specialization in the pre-foreclosure market. I work with sellers who are in default or will be in default and most often these sellers are ‘upside down’ on the value and loan amount owed to the lender. In the real estate world we call them ‘upside down’, ‘under water’, and if they have to sell then they are in some serious trouble. I comb the market looking for certain deals that would fit the area of my expertise and help them sell their home in some Pre-foreclosure scenario. In some cases I will do a short sale, loan modification, or a combination of many of the loss mitigation tools. I’ve found another niche that will help sellers most of the times get huge chucks of cash as long as they are willing to sell the home. Now, the story picks up.

I do direct marketing to these candidates, stop by their homes to knock on door or send special packages to them to get their attention that my intentions are to give them a check at closing before their time runs out! I found one of my sellers last week and thought they would be excited about hearing what I have to tell them and it was the exact opposite. They talked to some attorney and agent that if they sell their home, after the lender says that they are willing to not only work with them but are 100% ok with them receiving money at the closing, then they would have some legal recourse after the lender has agreed in writing to allow them to move forward with the transaction. I didn’t know what to say after their strong response after me telling them they are sitting on about $100k of equity. So, I wanted to begin the hard work of letting my audience know why a lender is willing to do this. And also to get some feedback from people who may have some ideas to help me be more successful with my approach and help these sellers out. (I use to customize the letters and breakdown how much equity they have by Ten Thousand increments but it was too unbelievable for most of the sellers and now I just write $5,000.00)This week I'll begin with a simple idea: When you don’t pay your mortgage payments then that mortgage, which really is a 'promise to pay' note, it is classified as a non-performing asset. Meaning the note is in default status on their books, a red mark on the ledger, which does not look well for their share holders, board members, or some government agency. If these lenders cannot control the percentage of defaults on their books then some unpleasant things start happening. The government can step in to examine their books or take control of their business but these days many are just shutting their doors and passing the serving of the note to another lender to deal with. Share holders start to panic and pull their money out. That is just one small part of their problems. Lenders are not designed to sell or hold property; they are in the business of lending money. When they have defaults on their books it affects lending power because they are suppose to keep reserves just incase the worst scenario happen to that property. Then it gets really fun because now that that are not making money on the loan they have to shell out money to insuring, maintenance, preserving(winterization), clean out, paying commissions, hiring agents, marketing, paying taxes, and the long lengthy process of foreclosure which will have an Opportunity Cost.