Are you a thief?

So let me get this straight. You have not paid towards your mortgage note since 2011. We are now in 2015. The bank is asking for their money by starting a foreclosure proceeding. Your auction date is scheduled for sometimes this coming December. However your primary goal is to keep the house.

Are you a thief?

I am so sorry for harsh language. Pardon me today. If you know me well, it’s not my style. But the question “are you a thief?” is the first thing that came to mind after speaking with a prospect this morning.

Of course I had to practice good customer service while talking to her. I had to be nice even though clearly, she does not realize that all adults in America has to incur housing expenses one way or the other typically between 20-30% of an average person’s income.

I even suggested that she should simply look at the last 4+ years as some sort of blessing because she has been living in home “not paid for” FOR FREE. This is the only way she could see the reality that she is well on her way to becoming homeless.

I get it. I really do.

People are attached to their home and therefore it is not some simple logical decision. But I would think an adult can’t get a proper full time sleep if the roof over their head is not being paid for. I personally won’t be at peace.

Here is the bottom line if you happen to have a family member or a friend with similar situation. It’s time to get rid of the property and walk with whatever you get before a foreclosure action. Even if that walk away dollar amount is $0 especially in the case of a negative equity.

A foreclosure auction will take everything away from the homeowner for about 7 years including credit or any financial credibility in the United States of America. Her priority at this moment should be to simply get rid of the property so she can sleep better at night.

When I asked her, she didn’t not even remember how much she owes in total on the mortgage loan principal. It typically does not mean she is not a good person. This is a sign of a distressed home owner. I know she isn’t a thief but that’s the conclusion that a logic reasoning leads to.

Sometimes, people would rather push their problems forward as far as it can go. Sometimes, it is scary to simply open and view the bill when in arrears. It’s normal but the problem only gets worse.

After I asked her just for an estimate owed/mortgage prinicipal balance, she said she owes $300,000. “Do you have an idea what the house is worth?” I asked. She said that the city is saying about $150,000.

Equity = Estiamted Property Worth – Estimated Amount Owed

Equity = $150,000 – $300,000 = -$50,000

She has negative equity which simply means she cannot sell the property unless a shortsale is negotiated. By the way the bank thinks the home owner deserves nothing if they are taking the loss in a shortsale. There are very little (close to zero) exceptions.

She insisted that she wanted to talk to a lawyer. I had to tell her I can’t help her. Not because I couldn’t. But I would have to sell or motivate her on getting focused on solution as opposed to titles and rights.

I can even refer her to a lawyer but I’d rather spend my limited time on clients that are clear on what they want and need. I have more of them than I actually have time. I wish there was more time. I can keep going but I have to stop here.

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