But in this case, according to Gusman, the servicer demanded a higher sale price than indicated by the would-be short-sale purchaser's appraisal. The servicer then referred the case to the owner of the mortgage -- Freddie Mac -- where contentious negotiations have continued.
There is still another complication, said Gusman -- one that could potentially affect thousands of short sales in 2008: Besides first mortgages, many houses have large home equity lines. As junior liens, credit lines can be totally wiped out in foreclosures, leaving the bank that extended them empty-handed. However, for short sales to proceed, all lien holders generally must agree to the deal.
In a pending case involving a client of Gusman's, there is an $80,000 equity line debt on the property. The bank says it wants nothing less than 50 cents on the dollar -- $40,000 -- while the owner of the mortgage, Freddie Mac, generally limits its offers to 10 cents on the dollar.
