Foreclosures and Short Sales

I have to pass on my experience as a Realtor with a short sale that I just went through. When you hear how mortgage companies and banks are trying to keep from foreclosing on a property, I don't believe that is entirely accurate.

I had a client who readily admitted they should have never purchased their home; nor should they have been loaned the money to purchase the home. They were "roped" into it by his parents who wanted to "keep the house in the family" after the parents decided to downsize. What this young couple didn't know was not only were there lots of costly repairs on the home; but the entire group of siblings would, at one time or another, move in with them and not pay a dime! They quickly got in over their heads.

They listed the home with an agent referred by the parents; it never sold and they got further and further in debt and could not make payments. They contacted the mortgage company to determine how to proceed on a short sale. I was then contacted by the young couple and listed the home - advertising it as a short sale. Within 4 days we had an offer; an offer that would have netted the mortgage company only $17,000 less than what was owed. After almost THREE months of "analysis" by the mortgage company (yes - it DOES take that long for them to determine if they WILL accept the offer) and an appraisal that came in at $10,000 MORE than what the couple owed (we still don't understand the high appraisal with all the repairs needed!); the mortgage company refused the offer and promptly told us if the couple could not pay their mortgage, they would begin foreclosure proceedings.

NOW - as a Realtor, it makes absolutely NO SENSE to me why a mortgage company would prefer to set the house up for foreclosure instead of taking an offer that would net them only $17,000 less than what was owed on this home. The house will now sit there empty and be a "beacon" for vandalism, neglect, etc.