I'm not normally a crusader, but I'm ready to pick up a pitchfork and march to Washington.
Short sale after short sale is being hyjacked by the underhanded tactics of the junior lien holder.
It works like this:
Mr. and Mrs. Homeowner are in trouble and need to sell their home before it gets foreclosed on. They used two loans, a first and a second, to purchase their home. After months of negotiation and marketing, a buyer has agreed to buy, the first lien holder has agreed to a price and the junior lien holder has agreed to sign off for a certain amount so the escrow can close.
Suddenly, the deal gets thrown for a loop when it's announced that the junior lien holder has sold his note right before closing. The new note owner demands more money then was previously agreed to and the deal ends up crashing and burning. Months and months of hard work by several people gone in a weeks worth of time.
Not only is Mr. and Mrs. Homeowner bitterly disappointed that they lost their home to foreclosure, but they find out the new note holder is a collection agency and that agency will hound them to pay that note until they are forced to file bankruptcy. Sound like fun?
I have no problem with the junior lien holder trying to minimize their losses, but how ethical is it to "pretend" to come to an agreement, only to leverage that agreement for more money at the 11th hour?
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