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