[quote]1. The pre-foreclosure data looks much worse than it actually is. That’s because this data includes defaults on second mortgages. Many people intentionally defaulted on the 2nd mortgages only, knowing that the junior lien holders don’t have the legal right to kick them out. At the same time, these same people negotiate with the primary mortgage lender to lower their mortgage payments. So, a significant percentage of the properties that are in default will not end up as REOs.
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Please document this phenomenon. I study RE a lot and the first I heard of this was from the Realtor on the other thread. Sorry that does not make it postable fact.

So banks have turned on each other? Traditionally banks defend each other’s right to collect to the end. The reason we have credit reporting agencies is so a bank you want a loan from can find out if you’ve screwed one of the brethren.

It’s that simple huh? Just stop paying the second, get a loan mod from the first and lifes peachy? Wow. Does the bank holding the first consider that the property is still encumbered by the second while they are negotiating this killer new low mod payment or does the second just hang their head and walk away?

Not saying it’s not happening but I’d like to see some proof it’s a regular occurrence. Sounds whack.