House Poor: Big Losers and Short Sales
A Friday Funny by Steve Cook
Posted by: RET Staff
We're bringing back our Friday Funnies series with this piece from Steve Cook.
In Mirage Mills, we've seen it all when it comes to the housing mess. Entire neighborhoods are so run down you would think Home Depot went out of business. Our kids think "bank owned" is an invitation to invite their friends to a weekend blow-out and trash a vacated house. The black market in copper stripped from hot water pipes and gutters is a major source of local employment. They don't call my town the Chernobyl of American real estate for nothing.
So it's no surprise that Mirage Mills was the birthplace of the short sale. Back then, we didn't call it a short sale. We called it the Big Loser.
The Big Loser was the brain child of Ernest S. Crowe, the smartest mortgage guy in town. His friend, Ziggy Callamitti, was farther underwater than Jacques Cousteau in a National Geographic special. The monthly payments were killing him, so Ziggy decided to walk away from his home and mail the keys to the bank. Today they call that a "strategic default." In those days we called it being a bum.
Ernest had a better idea. "Your bank will lose a ton of money if they foreclose on you. It will take them years to sell your house. I'll ask them if they would consider forgiving, say, ten percent of your principal and refinance you at today's rates. Then you would be able to afford your monthly payments."
"Why would they ever do that?" asked Ziggy. "They don't care if I lose my shirt. Ernest, these are the same people that sold me a loan they knew darn well I could never afford."
"You have to think like a banker," said Ernest with a knowing smile. "Bankers aren't stupid."