Bank Loses $400,000 – Wonder What They Will Want in Return?
When a person has a house whose market value is less than the value of the mortgage, they frequently try to get their mortgage holder to accept the proceeds from the sale as full consideration for the mortgage balance. For example, a family owes $200,000 on a house worth $160,000, and if the bank agrees to a “short sale” the proceeds of $160,000 completely wipe of the $200,000 debt.
As one might imagine, these short sales are very difficult to obtain, unless of course you are a powerful
figure. So Utah Senator Mike Lee, who is
pretty wealthy and the owner of a $1.1 million house had
no trouble in getting his bank to accept a short sale as he found the lowly
Senatorial pay of about $175,000 just wasn’t enough to enable him to live the
lifestyle he thought he was deserving of.
How much was the loss?
Less than two years into office, Sen. Mike Lee was forced to sell his dream home in Alpine with his mortgage bank taking a significant loss — up to $400,000 — in a "short sale" as the housing bust in his neighborhood drained his house’s value.
Wow, that’s a pretty steep loss, and if anyone thinks banks are just lined up to accept that size loss, well visit your local friendly banker and make a similar proposal to them, and cover your ears so your hearing will not be damaged by the peals of laughter.
But if one is a Senator getting a short sale and walking away with a $400,000 gain is probably not that difficult. After all the bank that held the mortgage is federally regulated, and who knows what type of favor they might want in the future.
As for Senator Lee, one might ask if he didn’t suffer a big loss in the deal, after all he lost all the money he had put in the house.
The home eventually sold for around $720,000, according to
records, after J.P. Morgan Chase agreed to write off the loss in the value and
Lee forfeited his "significant" down payment. Utah County
Hm, so the news report is that Sen. Lee lost his ‘significant’ down payment. And that news almost certainly came from Senator Lee. But wait a minute, the bank took a loss of $400,000 and the proceeds of the sale were $720,000 which says that the original loan must have been about $1.2 million for a $1.1 million home. Those numbers imply that Sen. Lee made absolutely no down payment at all. Or maybe he did make a down payment, of say, $100.00 which Sen. Lee now characterizes as significant.
Of course that would imply that a well connected politician got a sweetheart deal in the first place but that cannot be the case, that is something that almost never ever happens. But if everything was above board then surely Sen. Lee will soon release the details of all this. Yeah, right.