Dallas Real Estate/Bankruptcy Update: Creditors Getting More Negotiable
Dallas foreclosures are up again, according to Roddy’s Foreclosure Listing Service, Inc: more than 6,000 posted for October, more than 5,000 posted for November, with the estimated total for 2009 a whopping 60,000 — about the size of a town. But local creditors must be taking Happy Pills or getting smarter, says one bright young Dallas attorney. They are frantically working out deals with homeowners on debt to avoid all-out bankruptcy.
Say your home gets foreclosed on. What then? Your options are to file for bankruptcy or pay off the deficiency balance, which is the amount you are liable for on the note after the foreclosure sale. But what many people don’t know — in fact, I learned this just at dinner last night — that figure can usually be reduced to pennies on the dollar outside of filing bankruptcy IF you hire an attorney to negotiate with the mortgage company. And the mortgage companies are getting so bankruptcy weary, they are in a more negotiating mood, says Jacob A. Decker, an attorney with Allmand & Lee.
“The large five mortgage companies are really talking turkey now, ” says Decker. “Last week, I settled one deficiency balance of $65,000 for less than $5,000.”
The trick, he says, is to work with a bankruptcy law firm that deals with the creditors on a daily basis in a bankruptcy context. That way, the lenders know that if they do not settle for a pennies on the dollar, the next step will be a bankruptcy filing where they will likely get zilch. A couple thousand versus zero? Decker says the lenders will almost always take the money.
Toss in cash-strapped tenants who are filing to wriggle free of long-term leases, bankruptcy attorneys are busier than they have ever been, says Decker. He’s also seen a significant increase in creditors’ willingness to settle other debt — renegotiate auto, student loan and even credit card debt. Bankruptcy attorneys are raking it in. Full disclosure: I have first-hand knowledge of how hard they’re working and am not complaining one bit: Decker is my new son-in-law!
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I know a couple of the banks/lenders are supposedly working a lot quicker on short sales than previously. Offer responses are coming back and deals are being made in weeks instead of months… or never.
Candy,
I thought the vaunted local real estate gurus had already called bottom at the beginning of June, remember?
http://tinyurl.com/ykktzvy
Only hindsight will determine, with any accuracy, the rock bottom of the Dallas real estate market. All we can do is speculate and brace ourselves for the worst. It is certain that the current status of the Dallas real estate market measured by the transactions of the same are dismal. Further, any property that could be purchased today could be purchased at a significant discount in the upcoming 12 months. Hold on tight Dallas, the end is not near.
@Will: Bingo: every day is the best day to buy when you are selling anything!
Good news Dallas homeowners and first time home buyers. I overheard an attorney at Barrett Daffin (the Addison based law firm that represents the large and in charge mortgage companies) state that mortgage companies are going to put the brakes on foreclosures for the holiday season. In other words, put away your check book and wait for the deals to come in February or March.