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Simple Explanation For Why HAFA Will Not Help Short Sales With 2nd Mortgages

The always excellent Calculated Risk goes into the simple reasons why 2nd mortgage holders are unlikely to embrace HAFA.

When a 2nd mortgage holder can only recover 3% of the loan or $3000, whichever is LESS, and they have to release the seller from all future liability, I can see why they will not be quick to take the deal.  In Minnesota, a foreclosure does not wipe out the 2nd lienholder’s rights and therefore it’s quite possible that they will seek future payments via collections – I could imagine them getting far more than 3% back that way.

While some 2nd mortgage companies have already been taking payments around this amount, many will not and I don’t see that changing – HAFA will help, but it will help far more on homes where there is only one mortgage vs two.

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TwinCitiesRealEstateBlog.com is not a Multiple Listing Service MLS, nor does it offer MLS access.
This website is a service of Aaron Dickinson of Edina Realty, a broker Participant of the Regional Multiple Listing Service of Minnesota, Inc.