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.

NOTE
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.