Greg Hull couldn’t believe what he was hearing.
It was last fall, and Hull, a Madison, Wis.-area real estate agent for the past six years, was in the midst of difficult negotiations on a deal.
His client, Linda Paul, owned a four-bedroom, 3,300-square-foot home that had lost more than half its assessed value due mostly to dry rot and other massive water damage between 2006, when she bought it, and 2008, when she stopped making payments.
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Hull was trying to get Paul’s bank, JPMorgan Chase, to agree to a short sale, a compromise in which a home is sold for less than its outstanding mortgage. It can be good for both sides, because it generally does less damage to a seller’s credit while also typically costing the lender less in time and money to unload the property than a foreclosure would.
Hull was also hoping to get the bank to waive its right to make Paul pay the mortgage deficit, which came to more than $160,000 before late fees and interest.
But Paul had one additional request. She said Chase had offered in a letter to give her $20,000 for agreeing to the short sale.
“She said, ‘We’ll do the short sale, but make sure I still get my 20 grand,'” Hull recalled.
“I basically didn’t believe her,” he added. “I told her they were already looking at hundreds of thousands in losses on the forgiven deficit. Why would they give you $20,000 on top of it?”
But Paul was right, and she got her $20,000, in addition to walking away from the outstanding balance, when the home was sold to an investor on Oct. 21 for $116,000. Paul had purchased it for $334,000 in November 2006.
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