Homeowners with an underwater mortgage and a second lien have had trouble short selling their home due to the second mortgage holders not agreeing to the sale. Homeowners that want to be free and clear of a very troubling situation that comes from owing more on a home than the home is worth have been trying to avoid foreclosure and walking away from their home altogether.
However, there have been incentives offered to mortgage lenders if they help homeowners who have a second lien short sell their home. Foreclosure is something that doesn’t benefit the lender or the homeowner and for that reason many politicians and the Treasury Department have been prompting lenders to do more to help homeowners avoid foreclosure.
Lenders are being given compensation if they will agree to help homeowners short sell their home in cases where a second lien may be causing trouble. Second mortgage holders feel that they lose out if a homeowner short sales as the primary mortgage lender usually takes the majority share of anything the homeowner must pay.
Yet, many believe that second mortgage holders are going to lose out more so if they allow the homeowner to lose their home by foreclosure, rather than if they simply allow the homeowner to short sell their home. It’s hoped that these incentives for second mortgage holders will make the short sale process easier.
Homeowners are being advised though, to talk over the short sale with their lender so that they will not be obligated to continue paying on their home once it is sold. Some homeowners have sold their home in a short sale and have thought they were free and clear only to have their original mortgage lender come calling for more money.
Again, lenders are getting pressure to help homeowners avoid foreclosure and short sales are one way in which they can do just that, since homeowners with an underwater mortgage are growing very frustrated at their situation.