The comments about existing lenders have been spot on! It is not the borrower's choice they consider, just how then can collect the most of what is owed them. I understand they are in business to make money (and we need to make a living) but some borrowers have no control over the circumstances that put them in dire straights and this current economy has shown many more people in like circumstances than ever.

Although I have had some success – some better than others – it is the luck of the draw as much as the hard work we do. A lot of difficulty comes in that the borrowers don’t want others to know their business so you can’t threaten bad publicity as a way to make them listen to your borrowers’ needs. My personal best is $539,000+/- down to $173,000+/- and that took over 8 months of very hard work. Meanwhile, I am still required to keep production up so I make a living and my employer is happy with me.

The time you put into this type of transaction may result in a solution that will not pay you a dime. If you are not happy with that, don’t do this but refer them to someone who can help such as the Consumer Credit Counseling of Greater Atlanta who does not charge the customer. You may get them back if a short pay is finally accepted. Get to know the people there so you can stay involved in a peripheral role and stay in touch with the borrower.

What advice can I give? I can provide a “process” to follow that gives you some guidelines but each situation is different enough that you may wonder how good any guidelines are before you are finished. For starters, go to the lenders website. If they have a topic such as Home Retention or anything that says Foreclosure Assistance, you should be able to download their forms for your customer to fill out. If that lender does not provide forms, try Chase or Washington Mutual as they have a relatively easy set of forms. Just white out the company name.

Like you have been told by others, they will want the people to pay in full from the start and will go through various solutions before actually considering a short pay. In fact, some of the people will not understand what you mean by the term short pay and may keep saying short sale. Be patient and polite, preferably you will have the senior with you on the phone (speaker phone, extension, whatever works) so they can confirm this is what the borrower is agreeing to – but don’t let the borrower agree to anything other than the fact they can talk to you. And you should fax or email a Third Party Authorization form about 3 days in advance of calling so they have it in front of them. Be prepared to speak to a different person every time and resist asking for a supervisor early on so you don’t offend the lender’s employee and make things worse for your borrower.

The biggest issue on the downside is that the lender may require that the borrower put the home up for sale. If offers will net the lender more than your short pay, that may be forced on them, thus they will lose the home. Otherwise, should they choose to go back to just making the payments, they will be flagged in case they are late so the foreclosure process can be started sooner.

If a lender has signed up for the Making Homes Affordable program, they are required to do a certain amount of work outs so our thrust is to make as many as possible be for Seniors. And don’t neglect to remind the lender’s rep that every home kept off the market will assist them in keeping higher values on those that eventually need to be sold anyway.

If I haven’t discouraged you by this, I am very pleased and you will be well rewarded in feeling you have done the right thing. Although I acknowledge the economy is not the fault of just any one thing that was done, reluctance to work out some of these loans when people want to pay but can’t will only make things worse for all of us. Bankers who persist in foreclosing on properties that can’t possibly be sold for close to the amount owed are only making the situation worse and it could result in their no longer having a job because the lender is bought out or closed down. Lets all share in the responsibility and do what makes the cash start flowing positively again as soon as possible. That usually means a modification, short sale or short pay as opposed to foreclosure. The sooner everyone realizes this and makes a real effort to find a solution, the better off we will all be.

Good luck and God bless you with patience and perseverance.

Thanks for the information. Although she doesn't want to work out payment arrangements because she cannot afford to make any payments at all. She wants to make that payment go away but not have to leave her home. We are about 10K away from having a loan large enough to pay off her current balance and that is with me stripping the loan out. If I can just convince them to lower her payoff, that will be the only thing that saves her home.

Good luck and be prepared for a long battle.