Property Short-Sale Primer

Highlights include Citigroup Inc. (C), Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), U.S. Bancorp (USB) and Regions Financial Corp. (RF).

Currently, 8.3 million or 20% of the mortgages nationwide are in a negative equity position, meaning the homeowner owes more than the house is worth. This has caused a rise in short sales (selling a home fore a price that is less than the outstanding mortgage balance). In fact, individuals that may not be in financial trouble today but need to sell their homes and do not have the assets to satisfy the outstanding balance when the home sold could also benefit from a short sale.

The process starts with your real estate attorney opening a dialog with your lender. Typically the individual will need to supply the lender with an appraisal of the property and a list of your assets. Your attorney will then work with the lender on an agreement to take less than the amount owed in satisfaction of the debt, thereby releasing the mortgage and the homeowner from any further payment obligation.

Lenders may have a desire to participate, as it is often less expensive to take short money on a sale than to see a foreclosure through to fruition. As such this could effect financial institutions like but not limited to Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), US Bancorp (USB) and Regions (RF).

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Comment by jc

2009-04-01 22:47:00

You could say the same thing for EVERY other bank in the country that holds a mortgage. Which INCLUDES banks that were conveniently left out, such as JPMorgan, Morgan Stanley, Goldman Sachs”. And it includes any country, not just America.

The bigger the bank, the higher the risk in my opinion. But as usual, the media likes to favor certain big banks that they hold stock in.

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