by Calculated Risk on 9/19/2008 01:14:00 AM

“When you are ready to participate in the loss, feel free to call me."
Citi loss mitigation specialist to homeowner requesting short sale.

From David Streitfeld at the NY Times: The Pain of Selling a Home for Less Than the Loan

Reluctantly, banks are agreeing to let some short sales go through. But instead of writing off the unpaid portion of the debt, they want homeowners to sign a note promising to pay some or all of the balance due.

This was the situation confronting Mike and Linda Kelly, who needed to sell their house in the foreclosure-plagued Central Valley of California when Mr. Kelly got a new job 75 miles away.

The Kellys owe $300,000 on their house ... But the best offer they could get gave the bank $220,000.

CitiMortgage said it would approve a sale at that price, but at the last minute told the Kellys they needed to pay $166 a month for the next 20 years, a total of $40,000.

“When you are ready to participate in the loss, feel free to call me,” a Citi loss mitigation specialist ... wrote to them in an e-mail message.

The payments might total $40,000 over 20 years, but the present value of the payments is probably close to $20,000. Is avoiding foreclosure worth $20,000?