Financial Erotica - 50 Shades of Short Sales

Ok... FACT: Long term loan modification, principal reductions, and other enticements to distressed homeowners are fantasies for the vast majority (It's my belief that the "trial period" loan mod payment is simply a way for the bank to recover at least some of the payment while they proceed with foreclosure).  From the bank's perspective, the main purpose of the documentation required from the borrower for the "loan mod" is actually so that the bank can fully document the loan in preparation for collecting on the debt.

AND... Even though big banks are giving billions of dollars to distressed CA homeowners due to the mortgage settlement, it is mostly to get them out of their homes rather than help them stay.  Here's an LA Times story supporting this.

So, if you have a client who thinks they are getting a loan mod, get their short sale back-up plan in place now.  They are already doing the paperwork for the loan mod and it is largely the same as that required for a short sale.  Here's how:

1. Take a 12 month listing with a signed MLS waiver and an Authorization to Communicate. - this allows you to represent the homeowner and begin preparing their file, etc.
2. Help them with the loan mod. - if you do it properly it can speed up the process, keep the homeowner from providing documentation that could seriously hinder their short sale negotiation later on, and may even increase the chances of a successful modification.

Now, when the loan mod is unsuccessful, it's already your listing and you and your client have a far better chance at avoiding foreclosure.