As the number of short sale listings rise rapidly, the second mortgage holders are getting more and more brutal everyday.

The seconds are requiring 10% of the loan amount at closing and asking for a lump sum or an unsecured note for the difference (between the 10% they get a closing and the full loan amount) with monthly payments in order to release the secured note on the home and the sale to go through.

If the seller had either, they would be able to make their mortgage payments, not to mention that if thousands of dollars were laying around, the approval of the short short sale would be in jeopardy. A hardship that causes financial distress combined with lack of liquid asset and negative cash flow are major ingredients in a lender's consideration for a short sale.

I am not saying the someone has be completely broke but if there is a good amount of money on the distressed homeowners possession, the first mortgage holder is likely to ask for some, or all, amount in order to agree to release the mortgage and the note.

I have been able to negotiate notes with balance of, $97,000 to $30,000 with interest rates are low as 4% but lately I have not been able to get the seconds to just completely waive their "unsecured note" requirement.

How are your clients reacting to the requirement to sign a note? Would you care to share your experiences, frustrations and success stories?