Although short sales appear to be somewhat easier to negotiate with the lender (first lien holder), this is not always the case when there is a second lender (2nd Deed of Trust or Home Equity Line of Credit). These second lien holders are becoming more aggressive and want more of the purchase price than the usual amount offered by the first lender. Although the amount offered varies (according to HAFA the maximum is $6,000), these second lenders realize that the first may pay more to avoid a foreclosure.
Recently, the second lender has asked for amounts well in excess of what the first is willing to pay. In these cases, it becomes more difficult to negotiate a successful short sale. If the Purchaser is willing to raise the purchase price, the first lender says they want the extra money offered. To get more money to the second, while still satisfying the amount of the first wants, it becomes a delicate game of negotiations between sometimes unreasonable and unreachable negotiators.
The best advice in these situations is to be completely above board and do not let anyone talk the parties into side deals. Everything should be disclosed to both lenders. Any proposed HUD needs to be specific where any funds are coming from and who gets what.
Please contact me (Charlottesville Attorney) if you have any questions.
William D. Tucker, III
Tucker Griffin Barnes P.C.