Monday, July 25, 2011
A while back there was a lot of commotion about the so-called robo-signing of mortgage papers, a practice that is illegal. While that practice is still under great scrutiny and does not appear to have subsided (http://seattletimes.nwsource.com/html/realestate/2015674863_realrobos24.html), we are now facing the next wave of questionable procedures that are mortgage-related: 2nd Lien Holders are effectively extorting additional cash on the side from any of the transaction’s participants, be it the seller, buyer or Realtor. The consequences of non-payment of those demands are made very clear: Pay or the sale will be stalled or completely blocked as the lien will not be released. Often the buyers and sellers, tired of longwinded negotiations and waiting periods, will split the Lien Holder’s demands to get the sale closed. In Florida, all funds must cross the closing table and be duly disclosed in the HUD settlement statement.
Short Sales are a reality of this market and everyone knows someone who is or was affected. Shady and illegal processing practices will turn away property owners from attempting to sell their distressed properties and further add to the glut of foreclosed homes.
“Additional cash on the side” is an illegal practice that has once again put the spotlight on lenders and will help further diminish consumer confidence overall. http://www.cnbc.com/id/34877347