Bank wants $25,000 for short sale

we got notification of approval for a short sale on my wife's condo. glad to have it, but they want $25,000 as a contribution. we don't have $25,000 to pay. the problem is that, when we moved out of her condo, we purchased another home that was large enough for our family. during that purchase, we had a lump sum of cash in our joint account to pay for the down payment on the new house (bought in my name alone). the short sale bank asked for bank statements and, after seeing that, thinks we're loaded.

we sent a follow-up letter stating the situation, pointing out that we had a high balance because of payment on the new house, and stating that we cannot contribute $25,000 to closing. they responded that we must bring $25,000 to closing or execute a promisorry note for the difference between the short sale price and the mortgage price.

i'm hoping the brain trust here can give me some ideas. i'm not sure how to get in touch with the right people over there, but i believe they are analyzing this case incorrectly.

thanks for the help.

I am just curious - what's the loss that the bank is eating on the deal? How big was that lump of cash in your account?

I don't think the bank is analyzing the case "incorrectly". I think the bank is doing what the bank thinks is in their best interest. They probably aren't impressed with your excuse that you spent the money on another house. You officially owe them the entire balance of the mortgage, and you're asking them to forgive a debt.

Do you live in a recourse state?

jerosen said:   I don't think the bank is analyzing the case "incorrectly". I think the bank is doing what the bank thinks is in their best interest. They probably aren't impressed with your excuse that you spent the money on another house. You officially owe them the entire balance of the mortgage, and you're asking them to forgive a debt.

Do you live in a recourse state?

the hardship for this short sale is that the short sale home (a 1-br condo) is not large enough to house a family of two adults and two children and is unrentable due to a very complicated contractual issue (doesn't impact the short sale other than to make the property unrentable). the "excuse" of moving the family to a home large enough to fit it was explained to us to be reasonable and a reasonable hardship. what is in their "best interest" should be to do what's economically viable, i.e., allowing for a short sale that costs them less than it would to foreclose. perhaps i'm missing something with respect to that.

regardless, this thread is not about their analysis. i'm trying to find a way to address it.

btw, yes, this is a recourse state.

if it's important, the short sale property is titled solely in my wife's name, and the new home is titled solely in my name.

Based on what you said, it sounds like your wife may be on the hook for it...
You could divorce her and let her wallow in the recoursefulness of it all.

Oh, the two properties are titled separately? I don't know if it matters, but who is on the mortgage for the properties?

You could try negotiating with them for an amount lower than $25k. They may not accept less than the $25k but won't hurt to offer $10k or something and see what they say.

How much cash do you have on hand right now?

Tell them this: Okay, in this case we will foreclose, however we will take EVERYTHING and vandalize the rest. A family member did this and they even paid him 5 grand to simply short sale.

EDIT: OP, I applaud your decision to do whats best for your family and buy and bail. Loans are a business decision, personality should be kept out of it.

hebron1427 said:   what is in their "best interest" should be to do what's economically viable, i.e., allowing for a short sale that costs them less than it would to foreclose. perhaps i'm missing something with respect to thatThey might lose less by simply foreclosing

hebron1427 said:   we got notification of approval for a short sale on my wife's condo. glad to have it, but they want $25,000 as a contribution. we don't have $25,000 to pay. the problem is that, when we moved out of her condo, we purchased another home that was large enough for our family. during that purchase, we had a lump sum of cash in our joint account to pay for the down payment on the new house (bought in my name alone). the short sale bank asked for bank statements and, after seeing that, thinks we're loaded.
Mistake #1 - not waiting long enough after buying the new house before trying to short-sell the condo

Mistake #2 - when the bank asked for bank statements that showed you had $70k you actually gave it to them rather than saying, uh, never mind until enough time had passed where they wouldn't know about the lump sum

ZenNUTS said:   alamo11 said:   Tell them this: Okay, in this case we will foreclose, however we will take EVERYTHING and vandalize the rest. A family member did this and they even paid him 5 grand to simply short sale.

EDIT: OP, I applaud your decision to do whats best for your family and buy and bail. Loans are a business decision, personality should be kept out of it.Please, do tell us that the scum bag is in jail.

No, he was recently approved for a new loan and bought the house across the street from his old one. He didn't actually destroy the home, he just threatened to to get the bank to waive the 10k contribution.

alamo11 said:   Tell them this: Okay, in this case we will foreclose, however we will take EVERYTHING and vandalize the rest. A family member did this and they even paid him 5 grand to simply short sale.

EDIT: OP, I applaud your decision to do whats best for your family and buy and bail. Loans are a business decision, personality should be kept out of it.

Honestly, nothing wrong with threatening.

OP, the obvious course for them is to get a judgment against you for the $25K and then attach it to your new home. That would be hell for you. Try to work something else out.

Glitch99 said:   MEGAWALLET said:   winter said:   hebron1427 said:   we got notification of approval for a short sale on my wife's condo. glad to have it, but they want $25,000 as a contribution. we don't have $25,000 to pay. the problem is that, when we moved out of her condo, we purchased another home that was large enough for our family. during that purchase, we had a lump sum of cash in our joint account to pay for the down payment on the new house (bought in my name alone). the short sale bank asked for bank statements and, after seeing that, thinks we're loaded.
Mistake #1 - not waiting long enough after buying the new house before trying to short-sell the condo

Mistake #2 - when the bank asked for bank statements that showed you had $70k you actually gave it to them rather than saying, uh, never mind until enough time had passed where they wouldn't know about the lump sum

Ding ding ding ding ding ding ding ding!!!!!!!!

You just couldn't rent. Couldn't keep the $25k in cash. Genius.Well in this case had he rented and kept the $25k, he'd just be giving the $25k to the bank as part of selling his condo anyways. Getting rid of the money was a good move, the mistake was providing documentation that he had had that much in the first place. Another reason to keep some random bank bonus accounts open beyond the promo requirements, you always have some low-balance statements to document your poverty.

I meant keep the $25k in cash in a safe/under the mattress, not in an account.

doesn't mean it is right thing to doMEGAWALLET said:   kloakndaggers said:   actually yes there is. what kind of world do we live in when we threaten to destroy something bought on credit...my god. MEGAWALLET said:   alamo11 said:   Tell them this: Okay, in this case we will foreclose, however we will take EVERYTHING and vandalize the rest. A family member did this and they even paid him 5 grand to simply short sale.

EDIT: OP, I applaud your decision to do whats best for your family and buy and bail. Loans are a business decision, personality should be kept out of it.

Honestly, nothing wrong with threatening.

People threaten to do all sorts of unsavory things all the time. See: legal system.

Irresponsible, untrustworthy, and stupid people should not be allowed to breed.

The OP was irresponsible by growing his family in an environment which he himself claims causes hardship. Nevermind the financial aspects of all of this, the husband and wife knew the living situation they were in, and how "hard" it would be to raise two children in that situation.

The OP is untrustworthy by first invoking trust from the bank through a personal guarantee, and then decide to breech the promissory note contract. People that tell you they'll do something of this size and scale but then doesn't are untrustworthy.

The OP is stupid for not researching the process of a short sale to properly manage his finances. That the bank will take a look at *everything* you own and decide to approve or ask you to contribute is common knowledge and easily learned through basic research. Even most keyword loaded advert-blogs contain this nugget of information.

I did a short sale about three years ago. The bank did not write off anything. I came to the closing and signed a note for 56k. The bank did however allow me to pay back the balance over 15 years at 0% interest. I don't see any details on your promissary note. You should be able to negotiate something similiar.

Alcibiades said:   hebron1427 said:   what is in their "best interest" should be to do what's economically viable, i.e., allowing for a short sale that costs them less than it would to foreclose. perhaps i'm missing something with respect to thatThey might lose less by simply foreclosing

can you give some details as to how you're calculating this?

CrAsian said:   Based on what you said, it sounds like your wife may be on the hook for it...
You could divorce her and let her wallow in the recoursefulness of it all.

Oh, the two properties are titled separately? I don't know if it matters, but who is on the mortgage for the properties?

yes, mortgages are separate. my wife bought this condo before our marriage. The bank seemed happy to approve a 22 year old for 0 down payment and a 7% mortgage in 2007. Now they don't want to take the loss on that poor business decision.

hebron1427 said:   CrAsian said:   Based on what you said, it sounds like your wife may be on the hook for it...
You could divorce her and let her wallow in the recoursefulness of it all.

Oh, the two properties are titled separately? I don't know if it matters, but who is on the mortgage for the properties?

yes, mortgages are separate. my wife bought this condo before our marriage. The bank seemed happy to approve a 22 year old for 0 down payment and a 7% mortgage in 2007. Now they don't want to take the loss on that poor business decision.

Obviously the bank was correct in the underwriting. You can afford the condo. You however have chosen to not pay the note even though you have the financial means to because it is a "hardship" to live in such a small condo. Now you blame the bank? You are one screwed up individual.

Whose name was on the bank statement? Yours, hers, or both? If hers or both, it seems to me you could have avoided this entire problem by keeping the money in a non-joint account in your name. Especially since you knew you were short-saling. If yours, and you aren't on the mortgage, why did you provide this statement at all?

How about you all pitch in and give me all your money to buy a new Porsche? It would make me happy, you would be doing a good deed, you just wouldn't be able to buy groceries for the next 3 months, but hey helping others first! Tell the bank to pound sand and either rent the place out, or destroy it for its scrap value.