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Second mortgages weigh heavily on the success of short sales

As banks are becoming increasingly eager to complete short sale transactions, distressed South Carolina homeowners may see a great opportunity to avoid the threat of foreclosure with a short sale. This is welcome news for those who wish to ease the burden of an underwater mortgage and gain a greater sense of financial security.

Unfortunately, however, a trend has emerged that may create some hurdles for those looking to pursue a short sale. Statistics show that homeowners with second mortgage, who are often the most financially strapped, have a tougher time securing a short sale than those with only one home mortgage.

In order for short sales to move forward, all of the parties that own the liens -- or mortgages -- against the home must approve the transaction. Though the owner of the first mortgage may agree to the sale, the second mortgage holder may be more obstinate. According to RealtyTrac, only 4.2 percent of short sales involved two mortgages during the second quarter of 2012, though 39 percent of homes entering foreclosure had multiple liens.

According to some financial observers, the financial institutions that own the second mortgages may be asking for too much from the homeowners to approve a short sale. This could explain why so many of these short sale transactions are being delayed or stopped completely. Another analyst notes that banks are aggressively trying to protect their interests, which doesn't always align with the needs of their customers.

Homeowners looking to avoid the stress and financial consequences of foreclosure simply want their short sale transaction to move swiftly, without major hitches. Navigating the intricacies of such a transaction can be particularly difficult, so it can be helpful to seek out trustworthy advice and counsel. Having an advocate could prove valuable when negotiating with mortgage lenders to approve a short sale on favorable, fair terms.

Source:

  • Short sales are among the many real estate transactions our firm is equipped to facilitate. If you have any questions about avoiding foreclosure, please take a look at our Charleston short sales page.

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