A month into the era of no-recourse-for-all-short-sale-lenders, how is it going?

The U-T carried this comment:

Since the law has passed, agents have seen banks revise their release of lien amounts in letters to larger figures. In one case, the number was bumped from $12,000 to $30,000.  “Right now, it’s hurting more than it’s helping,” said Jacalyn Blank, a San Diego short-sale negotiator.

John commented on the previous SB 458 post:

Was about to close on a short sale with $10,000 to the 2nd lien holder.  Now thanks to 458, the 2nd wants $45,000 which no one in this transaction has.

JimG is a realtor who does his share of short sales, here’s his report:

Our short sale girl is reporting deals are being held hostage by 2nd lien holders who want MUCH more $$$$. California law is backfiring at this time as the 2nd lenders have no incentive to play.

We have two short-sales in process that have been caught up in the same mire:

SS #1 – The second lender, whose original balance was $250,000 and will get nothing if the 1st lender forecloses, is holding out for $100,000.  At least the lender in third position is willing to take $3,000 on their $300,000 note.

SS #2 – Bank of America, who had agreed to take $25,000 on the second mortgage balance that was around $160,000, proceeded to sell the note to a no-name lender, who now wants $100,000.  They too will get nothing if the first forecloses.

Of the 2,757 detached and attached sales in San Diego County last month, 515 of them, or 19% were marked as short sales.  We can probably expect that short-sale closings are going to drop off over the next few months, and maybe forever – because what every short-sale negotiator is now trying to do is convince the first lender to settle for less.  Hopefully the first mortgage holders get fed up and just foreclose instead.

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