A not-so-short sale

one of the three tubs of paperwork from Nadine Scott's 7-month short sale, by Martina Castro

(Note: This blog references the audio piece that aired on January 19, 2010 about de-constructing the short sale process.)

When I first met Nadine Scott at the event to save her neighbor's house, I had no idea that I would be meeting her again, almost a year later, to talk about her own fight to keep her home. 

When I saw her again, we met up at her modest house on Ritchie Street, a couple of blocks up from where we first met.  I could see that she was still weighed down by the events of the past 11 months: receiving numerous denial letters from her lender to modify her loan, using up her 401K and savings to keep up with the unbearable monthly mortgage payments of $4200, filing for bankruptcy, falling into foreclosure, and a grueling seven-month long approval process for her short sale.  And on top of all that, Scott was also parenting two teenage girls, trying to run a shelter in the worst year for fundraising, all while on disability from her old job at the US Post Office.

Scott let me into her home, and into the details of the psychological toll that this whole process takes on a person.  She showed me the buckets of papers, overflowing with banks statements, W2's, and foreclosure notices. Scott tells me it wasn't having to submit all this extensive paperwork that bothered her, it was having to do it so many times:

"It's just constantly doing this, over and over and over. And it just really tires you out.  You're working with different negotiators and things like that. It can be very disheartening. Very."

Apparently, the foreclosure notices come certified mail, so each month she would have to go to the post office and sign for ten to fifteen at a time, all postmarked the same day.

These tubs of papers have been waiting for the shredder since October 14, 2009, when the short sale finally went through.  As she describes them to me, she carefully leafs through the papers, lingering over them as if she were going through old photos or mementos.  She stops on one loan statement and sighs:

"Good thing I'll never have to see one of these again…that’s what it was, $535,500…"

She's talking about her mortgage.  The Scotts had an interest-only loan, so in the years they struggled to make their payments, they hadn't paid off a single penny of the principle.

And the most tragic part, is that Nadine Scott's story is one of the GOOD ones. 

Even though it required a ton of patience and emotional strength, Nadine Scott and her family are still in their home.  They found a buyer willing to increase his offer to meet the lender's assessment of fair market value, then he paid it in cash (which Scott says made the process go faster), and finally, he agreed to let them stay in their home.  Now, with a much more manageable rent payment of $1500 a month, Scott's husband doesn't have to work two jobs, and the couple can focus on building their financial life back up again.

Scott was good to point out that while her story has a happy ending, many of her neighbors were not as lucky.  While she waited for the short sale process to go through:

"We saw families that were packing up, two doors down from me they packed up and left, across the street they packed up and left due to foreclosure…someone just packed up a couple more weeks ago.  So we lost several of our neighbors…"

 What's happened to Ritchie Street in East Oakland is happening on streets all over the country, as people get rejected for loan modifications, and ultimately give up under the stress of dealing with the obviously flawed short sale process. Nadine Scott credits a miracle with saving her home.

When I started reporting this piece, I barely knew the ins and outs of the short sale process, and now I know a lot more, but I am no less confused by it.

Realtor Gabriella Trujillo was at her wit's end when I spoke with her.  Having represented countless of homeowners like Nadine Scott through short sales, she was dumbfounded by how difficult it is, especially when it seems to be a win-win situation for banks and homeowners.

I tried to reach a negotiator at Bank of America to get their side of the story, but all of them directed me to the corporate media relations department.  The media specialist I spoke with, Rick Simon, was not willing to put anyone on the phone with me for an interview, or to go on tape himself on this issue.  But he did say that Bank of America is ahead of the curve on this, piloting a program similar to the new US Treasury guidelines, which are meant to expedite the short sale process.  He then directed me to use audio of David Sunlin from the NAR Webinar on short sales to represent the company's perspective on the issue.

I also called Nadine Scott's lender to see why that process took so long, but I haven't been able to reach them yet for comment.

At the very least, it seems that everyone -- homeowners, realtors, and banks -- can agree that the system is flawed.  When it comes to incentives to actually correct that system, it was Realtor Gabriella Trujillo who said:

"Follow the money...it's all about the money."

Who knows, maybe Scott and Trujillo are both right.  Somewhere between the money and a miracle is probably the way to digging out of this mess.

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If you want to know more about Nadine Scott's community work, visit her shelter's website, at Ariel Outreach Mission.

Here's the latest news about how the government's loan modification program isn't going as well as hoped.

If you want more information about the Homes Affordable Foreclosure Alternatives Program, go to MakingHomeAffordable.gov.