Please, will someone explain to me what the H-ll the banks or lenders are thinking?

Catherine Myers and I have teamed up to do short sales in Contra Costa County. We are getting calls even from out of state from our blog http://www.ccshortsales.com

 We had a meeting with a possible short sale this past week. Where this womans home is located the prices have halved in the last year or so. She and her husband refinanced a few years back. Their loan was 7.5%.

They have been able to handle this interest rate,  a little distraught they have lost equity but they love their home.

This april their interest jumps to 9%. They will not be able to handle the payments. They have not missed any payments, their credit is great. They went to the bank to explain their dilemma and asked if the bank would do a modification and keep at 7.5%.....Now , this 7.5% is certainly over the market interest rate today.

They were told NO. The bank stated they  need to go find a good realtor and do a short sale. Now what this bank apparently does not realize by the time they either do a short sale and /or go into foreclosure the bank is going to lose at least $100000 more.

Why would they not do the modification and keep at 7.5%?

I know there are a lot of people who knowingly took out loans , took out equity and used it for toys instead of putting back into the home for upgrades. I understand that people lied on a lot of their applications.

But there are people who refinanced for whatever reason and were given assurance they could refinance again in a few years to maintain their status quo.

These particular homeowners have lived in this home for 13 years. They had no intention of selling or leaving.

WHY? Would a lender not work with them at 7.5% even if only for a few years until the economy turned around for them to refinance?

We did suggest this gal talk to one of our mortgage people who has been doing 3rd party intervention to see if he could make any headway with the bank in regards to modification of loan before proceeding with a short sale.

Perhaps they will get someone else on the phone who will be somewhat more reasonable and realistic.

It does appear the banks are starting to realize that short sales are the way to go instead of foreclosure in terms of additional capital being lost.

You know the banks have gotten mad at the realtors as they think they have the homes priced to low. Well , if the banks would stop the foreclosures and allowing these homes to go so low we wouldn't have to list for so low.

When you have 3 or 4 foreclosures of like property within a half mile of your target home and the other listings on for more have been sitting for 6 months or longer at a higher price it does not take a rocket scientist to figure out to lower the price to the recent sold foreclosures to draw the buyers in.

Ok I got that off my chest.........so, if you know of anyone who might benefit by our services please send them our way and/or have them check out http://www.ccshortsales.com