What are second lienholders doing?
Just when first lienholders had
gotten very good about agreeing to give them 1,000-5,000 at closing without a
big hassle, the second lienholders changed the game.
The fact that the first
lienholder is willing to give the second lienholder a token amount although
they will not be entitled to anything at closing?
That isn't good enough for many
second lienholders today. They want more.
The biggest challenge we see in our
Jacksonville short sales is the demands of a second lienholder.
Many times they are sneaky! We
have seen second lienholders change the demand amount daily. Sometimes
they will give you a number, then when you find a way to make it happen the
number changes. It is not unusual for them to refuse to put it in
writing. They are even known to suggest payments off HUD when the
first disallows them getting a large cash payment. The tricks seem to be
endless when it comes to seconds these days.
We have seen sellers end up with a
foreclosure or bankruptcy because of the second lienholder not being willing to
take a small amount that the first lienholder agreed to give. THIS SHOULD
NEVER HAPPEN.
In my most recent case USAA is
demanding 75% of the balance of the second note at closing. This is when
they are only underwater around $50,000 and the first lienholder is underwater
$100,000. We will challenge this number and try to arrive at a
workable solution for the seller and both lienholders. Without doubt,
this 75% demand is only workable for one of the three parties.
- So what are second lienholders up to?
- Do they have insurance that will pay them more upon a
foreclosure than if they accept a small short sale payoff?
- Are they really just making decisions
that appear to be this poor?
- Do the investors and shareholders of these banks and
loans prefer to make 3,000 on a bad loan...or NOTHING at
foreclosure?
- Are they really MAKING MONEY at foreclosure
although they are not receiving any of the proceeds?
The real estate business is
hard. Short sales are hard. But we chose to do them as Jacksonville
short sale specialists because we see that as a place where we can really make
the difference in the lives of people that desperately need help.
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