I am having difficulties trying to sale my home through a short sale. The first mortgage has approved the sale and is taking a huge loss, since the home is upside down, now the problem I've encountered is that the second mortgage is not willing to approve the short sale, saying that they will not negotiate and settle for any type of partial payment. The want the full amount owed, or otherwise they rather the house be sold at auction. Now my question is what should I do? Should I insist them?..I don't understand why they rather have the home sell at auction and them get zero, than approve the short-sale and receive a certain percentage. The second mortgage was not a line of credit, it was used to purchase the home. Does anyone have any tips?
Tip one. Talk to an attorney. You have certain rights and protections in California. You may be throwing them away because you are assuming a short sale is the best course of action. Tip two: you need to provide more information. While there is no way to force a mortgage company to accept a short sale, there are ways to determine why they might choose not to. Some of the reasons are: 1) they think you can afford to pay; 2) the amount offered is nominal; 3) they have other plans or means to recover a greater sum.
If you are listening to a real estate attorney without advice of a lawyer you may find out you have made a very large financial mistake.
You need a good short sale negotiator. I mean experienced one. That person may or may not have to be an attorney but someone who knows the short sale process well and what it takes to persuade the second lien holder to accept a dime on the dollar.
To properly understand why this lender refuses to do things that make any business sense, These lenders are business people. What you said in your question doesn't make any business sense at all. We know in California purchase money loans are nonrecourse loans which means lenders can't come after you for personal liability if the house is foreclosed by the first.
Your ability to pay is irrelevant in their decision making because they can't come after you for reason stated above.
Also there is no need to consider bankrutpcy protection against the second for the same reason stated above.
Communiation is key. My tip to you would be to make sure you've not been talking to the wrong person. Try to go higher up. Sometimes when you speak to lower tier employees yout strange responses like the one you've described. Try this and let me know if you're going anywhere.
Also, are you talking to a collection agency? sometimes they say things that don't make sense.