The day we started was October 09, 2009. Her home was beautiful. She had put so much of her creativity and heart in it to make it feel like the peaceful place she had always envisioned. I still remember the smell of “cookie crunch” candles and the lush and peaceful backyard.

When she called me, she was hopeless. My client had lost her job in the construction industry and she was having a hard time making ends meet. She had sold her car as well as some of her valuables. She even had canceled her health insurance.

I had never done Short Sales before. I did not feel I had enough experience to handle them. But she wanted me to do it. She trusted me and I said yes. I was lucky I got good advice from a Real Estate Attorney as well as a Broker friend that decided to couch me during the process. I felt exited. I was giving her hope. We listed the home and got a buyer right away. After a meeting with the buyer, we got him to commit to the painful process as long as it may take. We ordered an inspection to assure he knew the condition of the house before he committed to it and he jumped on-board. Everything seemed to be going smooth. The Real Estate Attorney talked to my client and assured her that her situation as bad as it felt, was a good one (as good as it can get in Short Sales). We prepared the transaction package and submitted to the lender. And then the painful wait began.

My client had decided that she wanted to do the less amount of damage to her credit. I respected her decision. She had found a new job but with a 40% pay cut. Despite that, she refused to miss a payment. She worked extra hours instead. At the beginning, working an insane amount of hours didn’t seemed that hard but she was not prepared for the 8 months that follow. I am not sure if her decision not to miss a payment affected the speed in which the lender responded to us. The updates that we got at the beginning included words like “your case in the hands of the negotiator however the lender is responding to the more important ones first”. I could not understand what they meant by “the most important ones”. This was important for my client. It seemed that by keeping her mortgage current she was becoming “less important” to the bank. After all the lender was still getting paid. Doing the responsible thing was hurting her.

In December the lender sent 2 appraisers to provide BPO’s. One did a good quality job, and put some pride in her work. The other appraiser came in, took a few pictures and was gone in less than 10 minutes. His explanation was: “For the money, they are paying me to do this ($50 per BPO), I need to do as many as possible to make up for the “pay cut”. I could not believe it. His actions were going to affect my client somehow. But we kept on going.

We provided the lender with every single piece of document that was always required “as soon as possible”. However, “time is of the essence” meant nothing to them. The usual answer became “you will have an answer in the next 10 business days” which really meant the next month or two! The file kept transferring hands and each person needed one more addendum, one more bank statements, one more letter and after April 15th, one more tax return!. We had provided everything on time but each month that passed by, the statements were outdated so a new one was required.

Finally, the MI department approved it. The good news was that they would not require extra monies from my client. The other news was that for the investor to complete the package and finally provide us with the approval/demand letter they required 2 more BPO’s plus the updated documentation!. I call my client with the news and found out that the process had taken a toll on her. Her stress level is beyond anything I have seen. The almost 8 months of working herself to death had affected her health. She is beyond broke now and as expected, she broke down in tears.

The Buyer even though a little disappointed since he may not have a binding contract by the tax credit deadline, has proven to be an incredible human being. His compassion and understanding gives me hope in the human race. I am hoping that despite all, we can still get him qualify for the tax credit. He deserves it. However, this will only be possible if for once the “in the next 10 business days” is finally true.

Today I am exhausted. Tired of driving around all parts of town to find that perfect first home for my client. It is hard to see the frustration on first time home buyers. It is the first time that each of my deals requires me to write at least five offers for one to go through. To qualify for the $8000 tax credit, a short sale may not cut it, due to the amount of time the process takes, while a lender owned property will make you play the “highest and best” game, where despite offering over the asking price, first time home buyers are outbid by investors. The 90 day cure period was lifted…so we thought. Still the majority of lenders will not fund a flip, or will ask a number of documents to prove that the “flipper” is not making a huge profit. What is wrong with getting a house, remodeling it and selling it back at market value?

I have been working with investors as well. A lot faster, a lot easier. No closing costs from the seller required, any home qualifies as long as it is priced well. Closing happens fast, banks don’t think twice. Cash is king. Everybody wins…well not everybody for first time home buyers this makes their home buying experience HELL, and when you are their Realtor, your life becomes …hell!

Dealing with short sales is not fun either. How many BPO’s does the lender need? I guess when they pay the appraiser $50 per home, they can order as many as they want. It is challenging to try to help the appraiser to make an educated report, when the only thing he/she wants is to have it done as fast as they can since at $50 dollars they need to do at least 6 in the same amount of time to make close to what they would have made in a regular appraisal. Quantity weights more than quality.

The new rules coming up will allow short sellers that have been current in their loans at the time of the short sale to qualify for a new FHA loan right away. However if you are current in your payments, you become “less important” on the pile of short sales that the negotiator has to go through, and that only if they decide to talk to you if you are current. What do you recommend your client to do? Stay current or become important to the bank?

The more properties that sell at crazy prices, the more our home values go down. It makes sense to walk away from your home when you can buy the same model for half the price of your current mortgage. It make sense to walk away when you know that your house may never be worth the amount you owe.

I miss the good old days…