Help Me Howard: Short Sale

WSVN -- When you take a look at Jim and Patty, an old expression comes to mind: "There but for the grace of God goes me."

Patty Candelas: "I could have walked away from the house a long time ago, but I am trying to work with the bank."

Jim Candelas: "We are trying to do the right thing."

Three years ago, Jim and Patty bought this beautiful home in Broward.

Patty Candelas: "At the time that we bought it, the housing market was at the very peak. We paid top dollar for it."

They paid $485,000 for the home and another bank instantly gave them a $50,000 home equity line to remodel it.

Jim Candelas: "Put in a brand new kitchen, custom cabinets, granite tops."

Everything was great, then this hard-working couple started getting hit by sledgehammers. Jim had surgery and took months to recover, lost his job, their son died, leaving his autistic son for Jim and Patty to care for and expensive therapy to pay for.

Patty Candelas: "He still has some delays, learning problems, but I think he's going to be fine."

Suddenly, with a $4,000 monthly mortgage, with Troy's therapy and with no money coming in, their lifetime of savings dried up.

Jim Candelas: "Everything just snowballed. It just started coming down the hill, and now we are down to nothing, and all we want to do is sell our house."

Of course, at the same time, the housing market crashed. Then they thought they got lucky. Their lender, Countrywide, agreed to allow them to sell the house for $330,000 less than they owed in what is called a short sale.

Patrick Fraser: "So, basically, they are the ones who suggested, 'Try to short sell it.'"

Patty Candelas: "Yes, and told us how to do it."

But the Candelas say the bank was moving so slowly they became worried their buyer would back out of the deal.

Patty Candelas: "They tell us they will get back to us, and that they are sorry it's taken so long."

After we called Countrywide, they picked up the pace and approved the sale but then another problem. Remember that $50,000 home equity line they got from Wachovia to fix up the place? They sold some furniture, raised $10,000 and offered that to Wachovia. It doesn't sound like enough, $10,000, when you owe $50,000, but, Howard says, the second note holder is in a tough spot.

Howard Finklestein: "If you default on the loan and file for bankruptcy, the primary lender gets most of the money. If there is none left over, and, in this case, there won't be, the second mortgage holder gets nothing, so it might be in their best interest to accept the $10,000 because something is better that nothing."

But after three weeks of phone calls back and forth, the bank has not agreed to accept the $10,000 offer. That's all Jim has, and the proud, hardworking electrician is just about ready to give up.

Jim Candelas: "They are going to get this house because I'm going to do like everybody else is, I'm going to walk."

But what can a couple trying to avoid going into foreclosure do, Howard?

Howard Finkelstein: "Even though the home is in your name, the banks that hold the mortgage have the power. We are hearing from so many people who tell us the banks are holding things up, but, the bottom line is, once you start missing payments, the bank can do almost anything they want. It's in their best interest to help you, but they don't have to."

Countrywide has told the Candelas they are willing to take 80 percent of what they are owed, about $330,000. A spokesman at Wachovia, who holds the $50,000 home equity line and is being offered $10,000 by the Candelas, told me, "We look at it on a case by case basis and, in this environment, we are working with customers above what is normally called for to help the customers and the company."

Patty Candelas: "We worked and didn't think that all these things were going to happen, and it happened."

What happened to Jim and Patty is happening to thousands of South Floridians. Jim takes part of the blame for buying the house at the peak market. Part of the blame is bad luck: him getting sick and losing his job, and the final finger he points at the banking system.

Jim Candelas: "The banking institution in this country, and, grant you, this is the greatest country in the world, and I would defend it until death, but the banking institution in this country has ruined it."

Jim and Patty are still trying to get the short sale approved. Good luck, and, by the way now, if your lender agrees to allow you to sell your house for less than you owe, check the documents to make sure you are not on the hook for the difference.

Cash is tight for you, but you need to get a real estate attorney to check the paperwork for you. A few hundred bucks may save you tens of thousands of dollars.

Cash strapped struggles left you steaming? Feel like you own the short end of the stick? Contact us. We'll foreclose on the problem, and that will be a good thing.