[quote=sdcellar]It’s certainly not unheard of for debt to be settled at ten cents on the dollar, so to suggest that such a thing is ludicrous is, well, ludicrous.
Not saying that it’s easy or happens all the time, and I certainly have no idea how often it’s applied to mortgage debt, but it does happen in general.
More importantly, I don’t think every single last underwater homeowner is as eager to walk away from their home you might think.[/quote]
No one said debt is never settled. Of course it is. We are talking about a specific kind of debt, lien secured 2nds, and whether or not the statement below is accurate or truthful:
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.
The data you will find on this subject suggests that seconds are being modified along with firsts, (very little in CA though) not disregarded or extinguished.
Maybe you would like to offer the documentation of this phenomenon the realtor has failed to supply?
I’m not saying that second holders also don’t very often end up with nothing or through a foreclosure sale get a fraction of what’s owed them. I’m saying they are not doing/allowing what the realtor describes in any kind of numbers. Do I really need to explain this?
I am asking for proof, any proof, any story that shows foreclosures or short sales before a foreclosure, are being PREVENTED (other than maybe short term) by people negotiating with the primary and ignoring second mortgage holders.
