When persistence pays off

WASHINGTON — Laurel Wittman and her husband, Eduardo Lopes, are examples of a rare species: successful short-sale buyers.

The unfortunate trio of nothing-down mortgages, sharp increases in adjustable-rate payments and shrinking home values has driven more strapped owners to ask their lenders to approve short sales as an alternative to foreclosure.

The sales price is short of the amount owed to the lender, but lenders will sometimes accept such deals because foreclosures cost them even more money.

It's not an easy way to buy a house.

Wittman and Lopes endured a five-month wait to buy a five-bedroom Fairfax County, Va., house that was headed for foreclosure. They offered to pay the full asking price, aware that their offer would have to be approved by the seller's lender.

They didn't expect to be the only ones interested in making the deal.

Months went by with no response from the lender, SunTrust Mortgage. At times, the couple wondered if the deal was worth the hassle.

But persistence won them a nice house with a garage for $510,000, which was $90,000 less than its recent appraised value and nearly $117,000 less than the latest tax assessment. If you believe that time is money, though, they paid plenty.

"If you had any urgency, you couldn't have done this," Wittman said. "It was all about just trying to get anyone to respond."

The new house has several features that made it a good choice for Lopes, who has used a wheelchair since 2005 because of multiple sclerosis.

There's a main-level bedroom and bathroom, plus an updated kitchen with plenty of maneuvering room. It can easily accommodate a ramp to the front porch and a chair lift to the back door.

The home went on the market last May at $575,000, which was out of the couple's price range. By September, the asking price was down to $550,000, still more than they could afford. On Sept. 19, the asking price dropped to $499,950.

Until then, Lopes hadn't wanted to get involved with the hassle of trying to buy anything at a short sale, but that price cut changed his mind. "Suddenly, it was inside our price range, and it was a lot of house," Lopes said. "It became worth our time."

They thought the lender's review would add only a few weeks to the process. After all, they were offering the full asking price. So their purchase offer called for settlement no later than Nov. 15 — only six weeks away.

"We thought that was reasonable," Wittman said.

And the waiting began.

They found the lack of communication about the sale particularly frustrating.

"We could not directly contact the lender," Lopes said. The lender would communicate only with the seller and the seller's real-estate agent.

Repeatedly, the couple extended the expiration date on their purchase offer.

Behind the scenes, SunTrust, the lender that held both a first mortgage for $480,000 and a second mortgage for $120,000 on the home, was communicating with the title-insurance company, AIG United Guaranty.

According to a letter Lopes obtained, the mortgage insurer told the lender that it wanted to increase the payoff on the second mortgage to $50,000.

Wittman and Lopes weren't sure whether that meant they were going to get a counteroffer raising the price by $50,000.

"At that price, we weren't going to be able to do it, but we might have counteroffered," Wittman said.

But there was nothing for them to respond to. Neither the bank nor the seller had made them a counteroffer, and their original offer continued to gather dust.

"At this point, we just started having doubts," Wittman said. They began to look at other houses. With hope that it might finally nudge the deal along, on Dec. 24 they increased their offer by $10,000, to $510,000.

"It was just kind of a shot in the dark," Wittman said. "This was our last, best offer."

Their patience was running out. "You almost get a little offended," she said.

After all, they weren't the ones who were behind on payments. All they wanted to do was to buy the house — and for more than the listed price.

It took another month to get a response. On Jan. 25, SunTrust informed the seller's agent that it would accept the $510,000 offer. The commission to the seller's agent was cut to 2 percent of the sales price. The buyer's agent was also asked to cut his commission, but he refused.

The net to SunTrust: $476,548, nearly $124,000 less than was owed. It's unknown what additional compensation, if any, the bank received from mortgage insurance. SunTrust representatives did not respond to requests for comment.

Through the process, the couple never knew how close the bank was to foreclosing.

"Nobody was putting pressure except us to get this done," Wittman said.

Probably that's because they were the only ones to walk away with a gain. The seller lost his house. The bank lost money, but its sluggishness very nearly cost it a sale, too.