Question: I’m trying to purchase a short sale with three liens. A first at 600,000, a second at 80,000 and a third HELOC at 117. The bank holding the first two loans accepted the offer, which is coincidentally exactly what the house appraised for. The first and second have been zero’d out and forgiven. The bank holding the third in line HELOC, which I’m not giving the name of (although I should because they’re very inconsiderate) are holding the short sale hostage even though they are getting ten percent of the HELOC balance. We have offered 10,000,in addition to what the first bank is passing through (5,000). I thought they would rather finish a short sale than go into foreclosure. Nothing makes sense. Recently we offered them 15,000 on top of what the first bank is passing thru, bringing it 5,000 beyond what the house is appraising for, which means it’s not in the loan it’s out of my pocket. The retailer informed me the bank negotiator said if we give the bank 22,000 they’ll sign off today on the loan, otherwise, we’ll just have to wait. This is almost extortion, because it brings the price well over the appraisal. Is this all legal?
Answer: – Unfortunately yes… and it makes no sense at all because if it goes to foreclosure the 3rd gets nothing because no one will bid more than what it appraises for. And if they don’t agree to satisfy or release the lien, then it will continue to go to foreclosure. So you have to be persistent and prove to them again and again that what they are asking for is unrealistic.
Sometimes lenders will have 3rd party collection agencies handle the negotiations once it passes a certain time frame. This is typically when you’ll find a great deal of resistance and difficulty in negotiating the price you want. These collection agencies tend to be very unrealistic in their requests. We had a situation where they were being so unrealistic that after 6 months of negotiation and getting no where, we complained to the lender and told them how unprofessional, rude and dishonest this collection agency was. So they pulled the file from them and we were able to get the short sale approved and completed in less than 30 days.
So don’t give up, be persistent, stick to your offer, make them see that they are being ridiculous in what they are asking.