Most people are under the impression that on a second-position lien, they will be able to sign off on the short sale, even if you offer them $0.00. I am sorry to say that there are no second-position lien or junior liens that will accept $0.00. I’m sure even you would accept that deal. Everyone wants something for their time and to close out their position. Even if the lender knew that they had no chance in getting even a penny, if the home was taken to foreclosure by the first-position lien, they would still want something.
Let’s think about it. A lender knows they will get nothing in foreclosure so why would they spend the time filling out paper work and the resources to agree to a short sale and still get nothing. If you are not going to offer them anything, their best chance would be to let the property go to auction, which they still may not see any money, but they still don’t have to put fourth any effort. Even if the property is worth nothing, the way they see it, their time is worth money.
You need to satisfy all liens, and if they are already taking a loss, you need to make sure that whatever you are offering them is acceptable and worth the their time and effort. You can’t force a second-position lien that is going to lose $60,000 just to take $1,500. They might accept your offer and take the loss, but if they don’t, you can’t force them to. You have to make sure that you negotiate with the junior liens, or you stand to lose the short sale all together.
The important thing to remember is that one dollar is better than nothing and two dollars is better than one. As you go through the liens, you must offer something that is reasonable in comparison to the chance of loss the lender is about to take.