I heard recently from a reader who said the bank she had a mortgage with wanted her to continue to pay off part of the loan even after she sold her house for less than what she owed—a process known as a short sale.
Banks have always been able to pursue deficiency judgments against borrowers who didn’t pay everything back, but they didn’t do so aggressively so far in this housing slump.
Rick DeBruhl, the consumer affairs reporter at the NBC affiliate in Phoenix, sent us this report he did recently. The homeowner is being asked to pay $75,000 of the $200,000 difference between what he owes the bank and what his house is worth. Rick says he is hearing of more cases like this recently.
What’s interesting too about this case is that the bank, One West, is the entity formerly known as IndyMac. The private equity firms that bought IndyMac from the federal government agreed to continue the homeowner-friendly policies initiated by the FDIC after it took over IndyMac. Now that no longer appears to be the case.
Thanks to Rick DeBruhl for the tip and the clip!