There was reason for hope recently when my nephew and his wife found a cash buyer for their condo that is currently valued at less than half of their original mortgage. It was the first genuine offer after nearly three years their home has been sitting on the market. Their bank rejected the short sale however and told them frankly that it would not be considered because they "had made all their payments." Presumably, the short sale would be considered if they had been deadbeats but since they were hard-working, honest people they get no help from the bank to relieve what has become an impossible situation.
My heart is broken over the trap this young, talented, family struggles to escape with no help from any quarter. They either have to find a buyer that will pay double the market price for their condo or bring more than $100K to the closing, money they don't have, in order to make the bank whole. No short sale will be considered by the bank because they are not in default or near foreclosure.
I know its an all too common story these days but I haven't really understood the depth of this problem until this bank insulted my family. These are good, talented kids, both school teachers, with a young child. They live very responsible lives, full of promise. But these circumstances are crushing them.
They bought a small condo as a starter home at what turned out to be the top of the market. Then a baby came along (the most beautiful, intelligent, charming, talented child ever born, IMHO) and what was barely enough space for a young couple became very cramped for a family of three. In only a matter of weeks in 2008 the market value of their condo dropped more than 50%. Now they're stuck. Even if a family member wanted to bail them out (which we do) the bank won't allow relatives or friends to make the purchase as a short sale at the current market price. Only strangers are permitted to "help" them escape this disaster. But then, after three years of searching they find an all-cash buyer offering a current market price and the bank cynically denies the short sale because they have been responsible customers. It just makes me sick.
I said a year ago that there would inevitably be people taking to the streets because that was the only place people could go for redress of grievances these days in the face of such base political corruption. Little did I know the Arab spring and Occupy Wall Street would come true. Now I say any culture that treats its brightest and best with the contempt my nephew and his family have confronted will inevitably face serious systemic change. Economic justice demands an overhaul.
And this time the revolution will be televised.
10:26 AM PT: Wow. My first Rec List. I'm overwhelmed. Quick apology though - I should not have used the "deadbeats" remark above and I apologize for any offense it may have caused. It was my clumsy way of explaining my nephew and his wife had tried to do everything by the book. I am completely sympathetic to everyone whose homes are in jeopardy, no matter the cause.
The collective advice in the comments has been far-ranging and very helpful. Thanks everyone. The info will be passed along.