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Lawmaker offers help to close home deals

Posted: July 24, 2012 2:00 a.m.
Updated: July 24, 2012 2:00 a.m.

Urging swift passage of the Fast Help For Homeowners, or FHFH Act, the California Association of Realtors praised legislation introduced last week by Congressman Jerry McNerney (D-Stockton).

The Realtors association called the bill a common-sense piece of legislation regarding “short sales,” which require subordinate lien holders to respond to short sale offers within 45 days.

Properties often times have more than one loan against them. A home can have the original mortgage and an equity line of credit outstanding placing the equity lender in the second, or subordinate, position to recoup their money in event of a sale or repossession.

And Realtors complain closing sales for home buyers and sellers are repeatedly delayed by lenders holding the second position for a loan against a property while the lenders try to recoup as much money as possible on their original loan.

But the lengthy delays often result in a sale not going through at all.

“This week I received five acceptances on short sales, four of which have second lien holders that have not responded,” said Pam Ingram of RE/MAX of Santa Clarita.

Ingram has sent emails and left numerous messages with no response on properties she represents, she said. And one “buy offer” has an expiration date of July 30.

“There’s no guarantee that the first (lien holder) will extend the escrow,” Ingram said.

If passed into California law, the bill applies only to federally related mortgage loans, meaning standard conventional home loans will not have the same protection.

“Some of the second lien holders will work on their end at the same time as the first but some will wait to work on the file until they know what the first is going to do,” said Kathy Salisbury, with Triple D Realty in Stevenson Ranch.

“The issue with second liens most of the time isn’t so much the “time factor” but more about how much money they demand,” she said.

Salisbury said she trained under someone who completed 2,000 short sales in the last few years, which helps her negotiate with both parties in a timely manner.

However, agents would tend to agree the time factor isn’t as much of a difficulty as the amount the second liens end up demanding, she said. The trick is to come up with a viable solution of how to handle that situation.

Consumers shouldn’t wait so long before contacting a Realtor to handle a short sale, local experts said. Lenders have to agree to sell a home for less than what is owed on the house; in many cases for less than what the bank lent on the property and those negotiations take time.

Whether driven by emotions, embarrassment or attempts ato salvage their home, homeowners sometimes put off attempting to secure a short sale too long and end up with a notice of default or foreclosure action instead.

Free help is available through Realtors and the U.S. Department of Housing and Urban Development, experts said.

“I tell all of my short sale clients, if you have the money to keep your second current, do so. It helps with the negotiations,” Salisbury said. “And keep your HOA dues current because those become another issue in the short sale.”




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