We shared an office at Coldwell Banker Bain where we learned of our complimentary talents: here math, there marketing. We listed properties together, matching our skills to the benefit of the sellers, specifically short sellers.
Today, Victoria Parasochka is concentrating exclusively on the management of short sales at Cobalt Mortgage Loss Mitigation. As a licensed mortgage originator she expertly advises financially troubled home owners. Her solutions for each case are as different as the individual circumstances. Over a cup of coffee she addressed some of the issues she deals with on a daily basis.
Must people put their careers on hold because they are tied down by their “under-water” homes?
“That’s a common misconception,” Victoria says. “In fact, a new job or promotion that requires a move to another city is a perfectly good reason to ask your lender to accept a short sale. All other things being equal, the bank would be hard pressed to force you to own a home in a place where you no longer live, especially when you rent in the new city. The home you left behind has, in effect, become an investment property.”
Do I have to stop paying my mortgage before the bank allows a short sale?
“They are not supposed to, but many lenders deny loan modifications and short sales because homeowners are on time with mortgage payments. Lenders will always advise you to continue to make timely mortgage payments. They are correct when they remind you that you did sign the “note to repay” when you purchased your home. You , on the other hand, should ask yourself how long you should continue to struggle and make those mortgage payments. How long will it take until you’ve exhausted your cash reserves and depleted your 401K only to keep mortgage current? I can’t advice anyone to stop their mortgage payment. Just do the math.”
At what expense should a home owner protect his or her credit score?
“Good question,” Victoria says. “People should think twice about keeping up their mortgage payments for the sake of the credit score. Both loan modification and short sale resolution will negatively affect a person’s credit. Again, the question is whether you want to exhaust all your financial means and be broke or have your credit score temporarily damaged. Look at it this way, how long and how much effort will it take to repair your credit report versus returning to the financial status you once enjoyed?”
What about after it’s all over, is the short seller home free?
Victoria laughs: “Yes and no. There is no sure way to know whether the bank will come after you for deficiencies. That’s the amount the short seller “fell short” of making good on the promise to repay the note. Often you have to wait to know for certain until near the end of the short sale process. Only an approval letter that states that the lender will waive the deficiencies after closing will give that assurance. You may be surprised, but in my experience, about 90 percent of all cases lenders waive the short fall.”
You are talking here about just one lien-holder?
“Good question. When a short seller has a second or even third loan on the property, it is critical to obtain waivers from these lenders as well. The short sale negotiation process is the last chance to eliminate those ‘tales’, as we call them.”
Speaking of tales, this is the end of my conversation with Victoria. We may pick this conversation later. In the meantime, if you or one of your friends needs expert assistance you can reach Victoria (MLO# 114282) through the contact information provided on her website.
The Washington state legislature is preparing a law (1-page PDF file) which states that if a bank writes off debt from the short sale, they can’t then subsequently collect this debt from the seller. The bill was modeled after similar action passed in Oregon last year.