Oregon has taken some steps to help the loan modification process that could actually help.  Perhaps even start a trend.  And it's free!

The Oregon State Senate unanimously passed HB 3656 which states that a piggyback second lender has no right to sue in a foreclosure situation.

What does this mean?  Well some people during the height of the real estate market bubble were encouraged to finance a home with a piggyback loan.  So in order to buy a $500,000 home for no money down you would get a $400,000 loan and a simultaneous $100,000 second loan for the down payment.  The lender got double the fees and charges for originating two loans and the home owners got more house then they would have been able to the conventional way.

Things got bad for many of these home owners and they are now looking for loan modifications.  The lender of your first mortgage may agree to a modification but the second may not, forcing the property into foreclosure.  If a bank sells a home it's taken through foreclosure then it uses the proceeds to payoff as much of the debt as it can.  Leftover money would go to the second lien holder but in today's market there are no leftovers.

The only reason a second lender would want a foreclosure is so they can sue the home owners for the money they are still owed.  This would cause them to be bankrupt usually but the second lien holder would get to take what ever the home owners had left.

With this new Oregon bill the second PIGGYBACK lien holder can no longer sue making loan modifications and short sales a much more agreeable option. 

Foreclosure Notice

http://www.realtytrac.com/news-trends/agent-newsletter/current.html?a=b&year=2010&month=April&article=4&accnt=242901

 

PLEASE CHECK OUT OUR WEBSITE http//:www.TonyandLibby.com & OUR NEW PORTLAND METRO BLOG AT http//:www.TonyandLibby.blogspot.com & pdxrealtynews.com (make sure you leave comments)

 
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Tony and Libby Kelly, CRS, ABR, ePro, SRES, CLHMS, CDPE

Lake Oswego, OR

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Keller Williams Realty Portland Premiere

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In this forum we will offer discussions on a wide variety of subjects, but focus on Portland Metro and real estate. Hopefully our insights and experiences will inform, educate, challenge and entertain our readers week after week.


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