The Monday Memo: Tough day on the phones so far. A mom and pop investor called this morning saying he's in pretty big trouble. He trying to do a short sale on a condo that he bought here. The payment on his primary residence was exploding, too, and he managed to refinance it. But now that monthly payment, though fixed, is pretty expensive. He can't do that and the condo, too.
His question was: will the federal government come after me for taxes if I do manage to get the bank to agree to a short sale? (That's where the bank agrees to take less than owed to avoid higher costs of foreclosing). I said yes they will because it's not your primary residence. You never heard such a long forlorn sigh in your life. His back to the wall, and another exit blocked.
This afternoon came a call from Sacramento, a woman looking for help for her sister who lives in Vacaville. Their loan payment went from about $2,000 a month to $3,200 or so, she said. She said the loan was from Washington Mutual, which makes me suspect Option ARM. That's where the payment that most people make doesn't even cover all the interest. The loan gets bigger. She was looking for some kind of phone number for help. I sent her to that HOPE NOW hotline, 888-995- HOPE. It was another sad story of two hard-working people, a Spanish-speaking mom and dad, who got "snookered" by a loan they didn't understand. Now they're having to figure they might end back up in an apartment with the kids. The complete opposite of the American Dream.
And then another, a woman who just missed her first payment in August and asked for help , saying, "I'm just trying to figure out what to do." She said she's been on the phone to her loan servicer and keeps getting people who sound as if they're overseas. She said with all due respect to diversity she just cannot always understand what she's being told. More, she fears reaching out to someone other than her lender for help - worrying that she'll fall in with a ripoff artist who will take advantage. It's hard to know who to trust when your back is to the wall.
Finally, a real estate agent called. He's not losing his house. But he's frustrated by a growing practice among banks selling their foreclosure properties. He says he and his client put in an offer last week offering the asking price. Today, came an e-mail saying the bank is going to take offers for a few more days. That means it's seeking the multiple bids that have become a part of this bank-run market. The agent said it's soooo frustrating now. He calls it common practice that a seller should respond to an offer within 24 hours - and not use it as bait or a tool to get others to bid higher. Then again, this is not a common market.